A FLAGSHIP £40m project that will provide cheap heating and power to thousands of homes in Southampton has moved a step closer.

City chiefs have given the green light to donating a £4.8m grant to help pay for a combined heat and power plant suppling heating and hot water to thousands of homes across the city.

Members of the City Council's ruling Liberal Democrat group approved the funds at a meeting.

Southampton City Council's Cabinet member for housing and homes, Councillor Paul Russell, said: "The project will have a big impact on the local area surrounding Millbrook.

"As well as the obvious benefits of better and affordable heating, which will improve the health of the local community by ensuring residents live in warm homes, it will provide local employment opportunities.

"Today's approval by Cabinet is another step forward for this major project, which has the capacity to improve the lives of thousands of people."

The announcement comes less than a week after the government awarded the council £3.5m to spend on the project.

The government cash will help pay for pipework to link the planned plant to about 3,400 homes in the outer Shirley area of the city.

Plans to build the plant at a site next to the M271 in Redbridge were given the green light in March this year.

When completed, it will provide heating and hot water for 3,440 council homes, nine schools and other council buildings in both Millbrook and Maybush.

Private homes will also be able to link up to the plant when it is completed in 2007.