Darlington has been given the green light to create an educational village, involving the demolition of two existing schools.

Approval was given on Tuesday for a £21.7m Private Finance Initiative scheme on the site of Haughton School. It will be demolished and a new school built in its place.

Beaumont Hill Special School and Technology School will also be torn down and rebuilt on the Haughton site, which will also be the base for a new Springfield Primary School and facilities for health and social services. The old Springfield School could be used for other public services.

Elsewhere, the cash will be used to re-locate Harrowgate Hill Infants' School on its junior school site.

Haughton School was built in 1958 and has 720 pupils. The new building will be the first new comprehensive school in the borough since Longfield was built in 1968.

Shelagh Potter, head teacher, welcomed the concept, which Haughton and Beaumont Hill schools have been working towards for some years.

"We will work more pro-actively with Beaumont Hill but, in my view, there is also a much bigger picture which will bring in the adult community, and junior school children working with our 12-year-olds."

Mrs Potter said she felt it was inspiring for her pupils to have strong links with the special needs students, who in turn would have the opportunity to make huge strides forward in their learning.

Pupils will stay in the current Haughton School until the new building is ready and it is possible they will move in September 2005.

Eleanor Lister, the council's cabinet member for education, said: "This is an innovative project for Darlington. The scheme demonstrates an original concept, which allows us to build further on our successes of improving schools and raising achievement while at the same time focusing on educational inclusion.

"This is just the green light. We still have much work to do to turn the proposals into reality.

"We are working with school governors, head teachers, teaching and non-teaching staff at schools to ensure that everyone understands and is involved with the scheme.

The successful bid brings private sector finance and skills into the public sector. Private companies enter 25-year contracts with councils to build new schools, refurbish existing ones and take care of services.

Councils do not pay for the initial investment, but will be allowed to pay an agreed sum to the contractor over the 25 years.