THE controversial Private Finance Initiative (PFI) scheme will be used to create Durham University's first new college in 30 years.

The scheme will add more than 600 study-bedrooms to the university's stock, relieving the pressure on its other colleges and creating desperately-needed student accommodation. It will include an undergraduate college and rooms for postgraduates.

The tendering process is under way and the university plans for a developer to build and manage the accommodation, while the social, welfare, and community areas will be run by a team of college staff and student officers.

Students have expressed fears that whoever wins the contract might charge high rents for rooms, which will be let on a self-catering basis.

But the university said it would look at the proposed rent that students at the new college may be charged as part of the criteria during the tendering process. Student numbers have risen by more than a quarter to about 10,000 in Durham since 1994, with only a small increase in accommodation.

The new development follows the creation of two colleges at the university's Queen's Campus, Stockton, last year. It will be built on the Howlands site, off South Road, and is near to the Collingwood and Van Mildert colleges.

The site already has full planning permission for about 800 bed spaces, of which 191 have been built and are being used by postgraduate students.

As part of the university's overall accommodation plan, the 1960s-built postgraduate residential blocks at Parson's Field, near the racecourse sportsground, will be demolished and replaced with facilities for 350 students - creating room for 60 extra students.

The university has dismissed concerns over the new scheme being financed by PFI money. PFI schemes have been surrounded in controversy, particularly the University Hospital of North Durham, which was built under PFI with fewer beds than the hospital it replaced, causing scores of operations to be cancelled.

The university's vice-chancellor, Sir Kenneth Calman, said: "This is a milestone development for the university. Together with our two colleges at Queen's Campus, this represents the largest boost to student accommodation in the university for 40 years."

Work will begin on the development next summer and the first students will move into the college in October 2004.

The university has 13 colleges and societies in Durham as well as the two in Stockton.