A multi-million pound deal has been struck to create more than 1,000 jobs and resurrect the mothballed Siemens plant on Tyneside.

An American microchip manufacturer has agreed to buy the factory, so long as Government grant aid is approved.

More than 1,000 workers lost their jobs when the plant closed in 1998, a little over a year after it opened.

A source said: "The new deal is an exciting prospect for Tyneside and is set to create about the same number of jobs as Siemens did."

The name of the US firm involved is being kept a closely-guarded secret, as early identification could affect share prices and jeopardise the agreement.

The plant, which would make logic chips used in computers and mobile phones, could be reopened in six months.

It would create 500 high-tech jobs in the first year, to be followed by 500 more in the second year of operation. It will make a much wider range of products than Siemens did in North Tyneside.

A spokesman for Siemens said: "We have always maintained that we are committed to finding a buyer which would create jobs for the region.

"We have discussed options with a number of parties, but we cannot confirm a deal has been done."

Mike Collier, chief executive of regeneration agency, One NorthEast, said: "We would give as much support as possible to any company wishing to invest in the region. The reopening of the Siemens factory would be great news for the North- East.

North Tyneside College is so confident Siemens will reopen, it has opened a £2m semiconductor training centre, which will turn out more than 100 qualified workers a year.

Principal Paul Harvey said: "This is great news for the region. We have a training course in place and are ready to meet the needs of this new company.

"We always had faith that the plant would reopen and it is good to see that coming true."