WORK on East Lancashire's new £100million superhospital is expected to start next week.

Health chiefs hope to complete the deal which will allow work to start, at a meeting tomorrow, and it is due to take three years to complete.

A financial wrangle with a City investment agency, which was holding up the project at Queen's Park Hospital, has been ironed out, clearing the way for work to start.

East Lancashire Hospitals Trust is due to sign off the deal with its private sector partner Balfour Beatty, setting the seal on five years of negotiations and planning.

The contractors are expected to begin putting up hoardings and fences around the site on Monday. Health bosses will rent the finished hospital back from Balfour Beatty as part fo a Private Finance Initiative.

John Thomas, chief executive of East Lancashire Hospitals Trust, said: "I am delighted to confirm that the Trust is about to reach financial close, and the construction phase to develop the Queens Park Hospital site can begin."

The project had been held up by several months because it needed the backing of two investment agencies in the City before a bond could be issued to bring in investors.

One agency, Moodies, refused to give the project the investment rating because it failed one of their tests -- whether there was enough leeway in the deal to allow for extraordinary inflation on services provided by the developer, such as maintenance of the new building.

But after negotiations between all parties, including NHS private finance experts, Moodies are satisfied and the bond will be launched later this month.

A planning row, which also threatened to hold up work on the project, which will double the size of Queen's Park and allow for the closure of Blackburn Royal Infirmary in 2006, was resolved last month.

Private partners Balfour Beatty wanted to alter original plans and roof the new hospital in bright silver aluminium and make the buildings rectangular, rather than curved.

The hospital said the alterations were made for "clinical operation purposes" but after receiving word from Blackburn with Darwen Council that the alterations would be rejected on the grounds that it made the building 'dull' and 'unimaginative', the application was withdrawn.

Plans were resubmitted, with a grey slate roof, and gained approval.

The newly-completed hospital will have several key features including a new accident and emergency department, new heart laboratory which will see patients treated locally instead of at Blackpool, and a new integrated children's ward.