Work to transform Stroud's derelict Cashes Green hospital site into a new sustainable community will begin within weeks.

Innovative plans developed by Haboakus (a joint venture between Kevin McCloud's company Hab and housing group GreenSquare), site owners the Homes and Communities Agency (HCA) and local residents will:

•Result in 78 new homes on the site

•Bring part of the old hospital buildings back into use

•Introduce a tree-lined spine across the new neighbourhood as one of a series of environmentally sustainable measures

Haboakus has gained the agreement of Stroud District Council to start preparatory work on site. Following a lengthy competitive tender process, it has announced that the successful main building contractor is Gloucester-based Markey Construction, an established contractor with more than 50 years' experience of residential development.

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Markey's first work on site will include the erection of security fencing, installation of tree protection measures, the selective removal of some existing trees, and removal of asbestos from the existing buildings.

This will be followed by clearance and levelling of the majority of the old buildings, with the exception of the former nurses home and gate lodge.

The news follows months of consultation with local residents which has helped shape the plans.

HCA Head of Area David Warburton said: "After standing empty for so long, it really is great news for the local community that Cashes Green hospital is to become a thriving neighbourhood where people will want to live.

"The partners involved in this project have shown how community-led housing can be delivered - by involving people, responding to their views and coming up with a vision that can win local support.

"It is an excellent example of the Government's localism agenda in action. Local people have led the way on this, and I'm very pleased for them that this project has passed this important milestone after all the hard work that has been put in."

(CD/GK)