HOPES are rising that shipbuilder Swan Hunter could clinch a deal to plug a two-year gap in its order book.

Regional development agency One NorthEast last night confirmed it had organised talks with unions, politicians and the Ministry of Defence to persuade it to grant a hospital ship conversion contract to Swans.

Insiders said they were "hopeful" that a deal could be struck.

The Swan Hunter shipyard has a gap between the end of its £240m ship contract, which is due to finish next year, and a £2bn aircraft carrier contract which it is hoped will come to the Tyne by 2008.

The carrier contract is expected to create about 3,000 jobs if it comes to the region.

One NorthEast has organised several meetings with Swan's chairman Jaap Kroese, MPs and unions to discuss the lifeline.

Although nothing has been concluded, hopes are high that the hospital ship could help save Swans from being mothballed for two years due to the order gap.

The ship will be converted from a Royal Fleet Auxiliary landing ship into a floating hospital, costing about £50m.

It is hoped the Ministry of Defence will bring the jobs to the Tyne for the sole purpose of keeping the yard working.