PLANS for a £55m leisure scheme which will transform derelict land and create 2,500 jobs were unveiled yesterday.

The scheme will rejuvenate the former National Garden Festival Site in Gateshead and feature a railway heritage and education centre linked to the National Railway Museum, in York.

But the scheme could deal a blow to hopes of making the Tees Valley centrepiece of a rail heritage project.

An estimated 150,000 people a year are expected to be attracted to the development on the former Dunston coal staithes.

The scheme's creator, North-East businessman Crake Simpson, said the development would also comprise leisure and recreation facilities, including a Tyneside version of the London Eye.

There will be a hotel and health club, shops, pub and restaurants, offices, car parking and a wildlife and nature sanctuary.

Mr Simpson said: "Our scheme has the support of the National Railway Museum and our funding is secured."

Campaigners, determined to bring a railway heritage centre to Darlington, reacted with surprise at the announcement that the funding for a railway education centre could go to Gateshead.

As the birthplace of the railways, many people believe Darlington is the natural place for a heritage centre linked to the National Railway Museum.

Alistair Arkley, chairman of the Tees Valley partnership, said: "Anyone who has the wealth to invest in the community should be encouraged, and I would not want to sound negative about this idea.

"However, I would ask them to look at both what they were giving to their community and the rest of the North-East.

"The railway did not start in Gateshead, and there would be a push for any investment for a railway centre to be in Darlington.

"We would not want investment in the region to cause competition between two different areas. We want investment to benefit the whole of the region.