A £25 million scheme for regeneration of derelict land near York's National Railway Museum was unveiled today.

The ambitious package for an urban village on part of the tear-drop shaped site off Leeman Road - dubbed Bishops Fields - includes:

* 50,000 square feet of office space and local shops, creating over 500 jobs

* A four-star hotel, possibly based around a railway theme

* A new residential campus for 650 students from the College of Ripon & York St John.

The project would also offer the rail museum an opportunity to expand, providing the potential for a major new attraction showcasing the future of the rail industry.

It would also provide a new underground collections store - and might provide a catalyst for the eventual diversion of Leeman Road around the museum. This would enable the NRM's two sites - currently divided by the road - to be integrated into one museum campus.

Head of museum Andrew Scott said the development was crucial to the museum's future plans, and the land would be unlocked at no cost to the public purse.

"We cannot afford to stand still," he said. "We must constantly look for ways to grow and develop if we are to retain our key position and continue to care for the national collection."

The St John college is closing its Ripon campus and wants to move all students to York by September next year. It says the proposed halls of residence would provide high-quality accommodation.

Developers KeyLand Developments submitted the outline application to City of York Council today in partnership with the College and the museum.

The project would involve developing part of a former concrete works acquired by the museum earlier this year.

The NRM plans to develop the remaining portion of the works site with more outdoor attractions.

David Brimblecombe, managing director of KeyLand said the hotel was likely to have between 100 and 150 beds.

An American hotel operator was one of a number of parties KeyLand had spoken to.

It had a particular interest in themed locations and had an interest here in making use of the railway and Railway Museum theme for a hotel.

KeyLand said the three main buildings in the development would have minimal environmental impact and would be designed for low energy use.