EYESORE oil tanks next to Portland beach road are set to be demolished in a multi-million pound scheme.

The proposals are for fuel canisters near the beach road to make way for new offices, work units and improvements to the approaches to Portland.

Weymouth and Portland Borough Council and the South West of England Regional Development Agency (RDA) are joining forces to buy the 10-acre plot from Portland Port and develop it.

The council said that the proposed development of the Mere Tank Farm site should create about 150 jobs and boost the local economy before the 2012 Olympic events at the adjacent sailing academy.

Council environment spokesman Doug Hollings said: "This is a one-off opportunity to dramatically improve the local environment, remove an installation containing hazardous substances while developing the area to create more jobs and at no cost to the council tax payer.

"It will be another huge step forward in improving the approach to Portland.

"By entering into this partnership we will be able to work with the RDA to achieve this before we play host to the Olympic sailing events.

"This will be a great Olympic legacy to the area."

The final terms of the agreement are being negotiated with the proposals due to go to the RDA board and Department of Trade and Industry (DTI) for approval.

No organisations involved would confirm the cost of buying and redeveloping the site at this stage. Eight tanks with a capacity for 65,000 tonnes will go from the 10-acre site next to the beach road and Osprey Quay development, which includes the sailing academy, coastguard hanger and boat builders.

About 10 to 15 tankers a day collect such fuels as different kinds of diesel, burning oil, oil for heating and kerosene from the tanks to distribute to business, farms, hospitals and homes. Some of the oil is also used by ships for fuel.

Another two 'Marpol' tanks on a site south of Osprey Quay are also set to go. They are used for vessels to dispose of waste oil and materials under maritime pollution rules.

The current tank operations will continue for about a year and the purchase is proposed to take place in separate stages between March 2006 and March 2008.

The RDA would buy the site and the council would manage the project - the demolition and redevelopment - with funding from the RDA, whose South director of operations Kay Homer said: "Our discussions with the port have been positive and by March we hope to have a firm agreement.

"The purchase would be important to ensure that Osprey Quay continues to improve as we get closer to 2012, and would bring significant economic benefits for Weymouth and Portland."

Some tanks were demolished in 2003 but the plans are the death knell for the remaining landmarks.

Portland Port Group chairman John Langham said: "The Mere Tanks are still in exceptionally good condition after 100 years' service to the nation in peace and war.

"In the 10 years since they were taken over by Portland Port, they have been a valuable resource both to shipping and to the community, supplying, in a joint venture with ConocoPhillips, diesel and heating oil to farms, hospitals, businesses and houses around the region."

He added: "We regret the loss of the tank farm. However, plans are already well advanced for a major development of the port, involving the construction of extensive new deepwater berths and adjacent warehouses, and the proceeds of this sale will provide the finance for the first stage of the development which, in turn, will create more jobs in the years to come."