Lancaster City Council's planning committee this week agreed to extend the time limit on a 2007 outline planning permission for a development at Luneside West for another five years.

The proposals also include industrial and commercial properties, a neighbourhood centre which could incorporate a shop and other community facilities.

Under an agreement requested by the council, there will be 20 per cent affordable housing, which must all be available for social rent, and a contribution of £597,000 towards public transport improvements.

In 2008 Countryside Properties gained approval for detailed plans to develop the 26-acre site, which lies between the Marsh estate and Lune Business Park and includes the old Williamson's factory.

But Countryside were unable to strike a deal to buy the site from owners Michael and Diane Foy.

The Foys submitted the fresh outline plans and have been in talks with Redrow Homes and Barratt Homes, which lodged a separate detailed planning application last month which would see as many as 400 homes built, but without the industrial or commercial units.

A spokesperson for Redrow Homes said: "It is a joint venture, divided equally between Redrow and Barratt, and if approved will offer a good mix of properties from one-bedroom apartments to four-bedroom detached family homes."

The outline plans received one objection letter, while United Utilities asked for conditions to minimise the risk of flooding.

Andrew Dobson, the council's head of regeneration and policy, said: "Regenerating the quayside is a key aim and the planning committee supported the plans because they will help to achieve this.

"We welcome the investment into the district and look forward to working with the developer to create a development which is good for the people of Lancaster."