A £15 MILLION deal to revitalise a derelict and rundown area of York - and create new affordable housing - will be signed this week.

The housing will replace 57 empty and boarded-up Ministry of Defence properties - and another 40 rundown council houses - with 148 new homes.

Of these, 48 will be available for rent, and seven will be low-cost houses for sale. The proposed scheme will also improve existing public open space and play areas.

The deal is a victory for the Evening Press, which campaigned in the 1990s for an end to the scandal of MoD properties in North Yorkshire standing empty as homelessness increased.

Agreement has been struck between Harrison Developments Ltd, of Malton, City of York Council and Home Housing Association, which will own and manage rented property and administer "discount for sale" units.

Harrison says it bought the 57 defective and derelict houses from the MoD last year and had originally considered refurbishing them to a standard suitable for resale. Instead, it decided to link up with the council to redevelop the whole area of six acres.

Associate director Ian McAndrew said: "By working with the council and Home Housing, we have delivered a solution which brings many more benefits for the local community and the city as a whole. As soon as we get the council's go-ahead, we're ready to start work on the site."

Councillor Ruth Potter, the council's executive member for housing, said: "We are all aware that residents in the area have been hoping for this redevelopment for some time and have been closely involved in working up the ideas for new homes."

Many existing tenants will have the chance to move to the new properties as the scheme progresses.

It is hoped the project will be completed by 2004.

Updated: 12:09 Monday, November 11, 2002