A multi-million pound development scheme which will change the face of a large part of Chichester is set to be approved next week.

The move will not only bring new homes, businesses and a school to the city but also pay for major improvements to health care services for people with mental illness.

The development is centred on part of the sprawling campus of Graylingwell Psychiatric Hospital where National Health Services Estates has applied for permission to build 154 new homes.

The package also includes converting some hospital buildings for business use and a college of nursing and midwifery.

Both schemes are expected to be approved when the southern area Development Control committee of Chichester District Council meets on August 21.

But the housing element of the scheme will have to be referred to John Prescott, the Secretary for the Environment, Transport and the Regions, who could still order a public inquiry.

The 11-acre site is just over a mile away from the centre of the city and the scheme will also include the construction of a new link road.

The company which ultimately develops the site will also have to provide an area of land ready for a new primary school.

The developer will also have to pay a contribution to West Sussex County Council towards its construction, but the amount has still to be negotiated.

It is also likely that a condition will be imposed that at least 50 of the new homes must be low-cost social housing.

A report to the meeting says the application is the culmination of talks which have been taking place over the last two years and West Sussex councillors have already given the scheme their backing.

The project will help finance the construction of modern psychiatric care units to finally replace some buildings at Graylingwell which date back to the time it was a Victorian workhouse.