Brighton and Hove Albion have confirmed they are in discussions to buy out the club's former chairman Bill Archer.

Current Albion chairman Dick Knight has launched a bid to buy out his predecessor's shareholding, backed by current investors in the club including DJ Norman Cook.

He is also trying to attract new investment from a group of prominent local businessmen in an effort to end Mr Archer's financial stake in the promotion-chasing Seagulls.

Mr Knight and Mr Archer have each loaned the club about £1.4 million.

Both men have 49.5 per cent of the shares in Albion's holding company, with chief executive Martin Perry owning the other one per cent.

The club has confirmed Mr Archer is prepared to accept a one-off payment of £700,000 for his shares, which Mr Archer says will be released on receipt of the pay-off.

In a statement, chairman Dick Knight said:"The continuing success of the club and the very real progress being made towards our new stadium at Falmer has given us an opportunity to close a chapter in the history of our club.

"In accepting my offer of half his legal entitlement in the club, Bill Archer has made a generous gesture which we are happy to accept.

"We have the funds to purchase the shares and we are proceeding to complete the transaction as soon as possible.

"The willingness of local business people to help the Albion is much appreciated. It shows the strength of support for the club, including in the business sector in the city, and further underlines the economic case for our new stadium at Falmer".

Bill Archer, the chairman of Focus DIY, Britain's biggest independent DIY retailer, is still despised by fans for the way he ran the club.

According to investment bankers, Mr Archer's 25 per cent stake in Focus DIY is worth at least £300 million and he is preparing the company for a stock market float.

He has been advised to sever his links with Albion, even if it means losing half of his money, to avoid attracting bad publicity.

Mr Knight has already raised £350,000 of the £700,000 from existing directors, including Derek Chapman, and friends of the club who have invested money but do not want a seat on the board.

They include Norman Cook, alias Fatboy Slim, and Billy Brown, a multi-millionaire reinsurance specialist and Albion season ticket holder.

The Argus can reveal Mr Knight has also held a secret meeting with a group of well-known local businessmen in a bid to raise the other £350,000.

They include Robbie Raggio, owner of Hove Car Wash, antique dealer Terry Boyle and builder Jeff Watts.

They have been offered either a 1.4 per cent shareholding in return for £50,000 or £10,000 to secure special privileges at Albion's temporary home at Withdean and new stadium planned for Falmer.

They would receive hospitality discounts for Withdean and Falmer and priority seating in the new stadium.

The group have been given a deadline of next week to agree.

Mr Knight's plan will be broadly welcomed by supporters.

Albion had to ground-share with Gillingham in Kent after the Goldstone Ground in Hove, the club's home for almost a century, was sold and the Seagulls were almost relegated from the Football League.