OWNERS of houses scheduled for demolition could get new homes in compensation.

Persimmon Homes wants to demolish and redevelop the St Andrew's Estate in Bishop Auckland, after 120 homes containing asbestos were condemned.

That could end months of worry for 30 homeowners on the estate who feared they could lose tens of thousands of pounds.

Their houses are among properties in St Cuthbert's Walk and St Aidan's Walk which were found to have asbestos in the walls and corrosive salts in the concrete foundations.

Last year, Wear Valley District Council, which owns the rest of the homes, announced that they would have to be demolished because it would be unsafe to leave them standing.

Demolition crews are expected to move on to the estate early next year.

The decision brought bitter protests from people who bought their homes under the local authority right-to-buy scheme.

The council's legal advisors said the authority was not liable to compensate the home owners and would not be able to buy the houses for more than their site values - far less than market values.

Persimmon Homes could offer a solution to the problem after announcing its intention to give the owner-occupiers an acceptable sum for their properties or replace them with a three-bedroom home.

Director of housing Michael Laing told the housing services committee yesterday that it had been very difficult to find a solution acceptable to home owners.

He said: "Owner-occupiers are shocked and anxious. Many have mortgages on homes that have a lesser intrinsic value.

"They have suggested that they would agree to either being bought out for a sum close to the value of the dwellings pre 2001, or giving up their homes without payment if similar homes can be provided."

Negotiations still continuing between the council, the owner-occupiers and Persimmon Homes, but the authority's housing service committee voted yesterday to approve the developer's proposal in principle.