When it was designed 70 years ago by avant-garde Canadian architect Wells-Coates, Embassy Court was the most stylish building in Brighton.

Today, after years of neglect and decay, it is an eyesore second only to the West Pier.

Yesterday's announcement that Sir Terence Conran, the Habitat entrepreneur, restaurateur and design guru, is behind a £5 million revamp came as a long-awaited answer to the city's prayers.

Sir Terence, who at 73 is a virtual contemporary of the block, has promised to return the decrepit building to its original modish splendour.

But while the sense of enthusiasm is universal, a big question mark remains about the cash.

The legal battle which has rumbled on for almost 20 years was brought to a conclusion in March when a judge ruled in favour of Bluestorm, the company which grew out of a residents' association struggling to take over control of the flats.

Judge Michael Kennedy described attempts by previous leaseholders and landlords to frustrate their attempts as "more suited to a nursery school playground than to the conduct of responsible landlords."

His decision cleared the way for talks to begin, which resulted in yesterday's breakthrough.

He also ordered Portvale Holdings, which owns nine of the now 72 flats, to hand over £78,000 to kickstart the renovation.

The rest remains to be found.

Bluestorm will apply for National Lottery funding and cash from Europe to help foot the bill.

The 43 leaseholders will have to cover whatever remains from their own pockets, although the returns, in terms of the increase in value to the apartments, are likely to be enormous.

Bluestorm chairwoman Emma Jinks, 36, is confident the restoration can be achieved.

She said: "This is a building that must be saved, therefore it will be saved. There are 72 families living here - that's more than 200 people.

"Of course there are elements they don't find enjoyable but that's why it needs to be done up."

She wants the negotiations to be as open as possible to allow every leaseholder to have their say.

She said: "Where there was stagnation before, there is now a positive, energetic future."

Her optimism is met with some scepticism.

Manal Shahdi is 20 and has lived at Embassy Court for three and a half years with her parents and sister.

She said: "It's a nice place to live because of the sea but I don't think they can renovate it. The structure is not right. There's always water leaking everywhere."

An elderly resident said: "It is alright during the week but on Friday and Saturday nights you get drunk people coming in because there is a problem with the doors.

"It's a nice view but I think it would be a waste of time and money to try to restore it. I don't believe they will do it."

But with official backing and citywide support, Bluestorm insists it can make its dream a reality.

Resident Matt Ridsdale, 29, said: "It looks awful to people from the outside but on the inside looking out it doesn't seem so bad.

"It's a beautifully designed building and it is good something is being done."

Embassy Court was completed in 1935 as the first skyscraper in Brighton and Hove.

It caused tremendous controversy, with the 110ft building much taller than the Regency terrace next door.

Built on the site of the old Brunswick baths, it also had uncompromising horizontal lines which contrasted with the vertical lines in Brunswick Square and Terrace.

The 11-storey block of 104 flats was meticulously designed, with even internal fittings such as radios mirroring the modernist approach outside.

The building had the resort's first penthouse apartments, complete with rooftop sundecks, a restaurant and a bank.

It became a highly desirable place to live and was home to many wealthy Brightonians, including author and journalist Keith Waterhouse, who had a flat on the ninth floor from 1982 to 1993.

The block's architectural worth was recognised in 1984 when it became a Grade II* listed building. But it was at about this time that its fortunes began to wane.

There was a highly complicated dispute over the freehold and investment funds, which resulted in lengthy court battles.

It became hard to find anyone prepared to bring the battling parties together, despite the lure of cash from the Government's Single Regeneration Budget.

The rot started when many flats were taken over by absentee leaseholders and a succession of freeholders.

Leaseholders who built up large rent and service charge arrears were blamed for the lack of cash to maintain the building.

Portvale owned the freehold until 1997 when the firm went into liquidation after being ordered by a court to carry out repairs costing £1.5 million.

After a court battle, the freehold was taken over by the residents' association that formed Bluestorm.

Simon Fanshawe, chairman of the Brighton and Hove Economic Partnership, said: "They now have to find £5 million or about £70,000 each.

"But the point is that it is a commercially viable building."

Sir Terence is never slow to spot a commercial opportunity and has already had success in Brighton.

The old Argus building in North Road had been derelict for several years and damaged by fire when he took an interest in its renovation.

It is now being converted into fashionable loft-style apartments.

Other consultants involved in the Embassy Court project include structural engineers FJ Samuely, who were the original engineers, building services consultants Rybka and development managers Jackson Coles.

Don Turner, Brighton and Hove's economic development councillor, said: "We have been trying to assist them in any way we can without actually funding it.

"We're very happy something is now happening and Embassy Court will be restored."

Tory regeneration spokeswoman Mary Mears said: "It is marvellous news they are actually going to restore it.

"It was such a shame it was left to rot."

Green convenor Keith Taylor said: "Architecturally it is an asset to Brighton and it provides much-needed affordable housing.

"We want to see it restored to its former glory but not as yuppie flats."

Liberal Democrat group leader Paul Elgood said: "The problem with Embassy Court is that the residents have heard a lot of promises in the past but not much delivery.

"It's time to return this building to being one of one the jewels in Brighton and Hove's crown."