The third richest man in Britain has agreed to spend £450 million on Preston city centre over the next six years.

The Duke of Westminster's property firm, Grosvenor, has finally signed up to develop the Tithebarn Regeneration Area, a 30-acre site, creating a new bus station, new streets, homes, 12-screen cinema, shops, restaurants and bars.

Up to 5,000 jobs could be created and the project should be completed by 2011, in time for the next Preston Guild.

The deal means Grosvenor will get a 250-year lease over the area, bound by Ringway, Friargate, Cheapside and Church Street.

The Duke of Westminster was not around to sign the deal, Grosvenor's chief executive, Stephen Musgrave, shook hands with council leader John Collins and chief executive Jim Carr.

Coun Collins said: "We've worked really hard to get to this development agreement stage and it's an important moment for Preston but this hard work must continue if we are to maximise Tithebarn's potential."

The idea for the Tithebarn regeneration project was originally floated at the Town Centre Initiative Conference in 1998, and a year later Grosvenor and Preston City Council (PCC) started work on the project.

The past seven years have seen consultations, hold-ups, reviews, petitions, and finally, the setting up a City Centre Working Group, made up of nine councillors, who brokered the deal with Grosvenor.

The next stage will be to submit planning permission, which is likely in the new year.

After that an anchor department store has to be secured, and compulsory purchase orders may follow. A four-year deadline has been set for this process.

The news comes as an agreement "in principle" over the funding and location of Preston's bus station was reached by the county council, PCC, Grosvenor and the North West Development Agency. The new bus station will be located between Church Street and Manchester Road.

Coun Collins said there were still some hurdles but the council would try its hardest to make Tithebarn a reality.

Jim Carr, chief executive, said: "We're on the threshold of major regeneration and investment in Preston."

He said the council had appointed external consultants to ensure the council achieved "best value" in terms of getting out the same or more than what was put into the project in terms of the financial value of land and leases.

Ken Hudson, leader of the Conservative group commended the efforts of council officials who he said had negotiated a superb deal for the citizens of Preston.

Stephen Musgrave added: "We're delighted to have reached this milestone and signing the development agreement with the city council is a vitally important piece of this quite complex jigsaw. It is still complex, and there's still a way to go."

Grosvenor manages a property portfolio of £5.4billion, including parts of Mayfair and Belgravia, and has interests in 16 countries. It is owned by the Duke of Westminster, the third richest man in Britain according to the 2005 Sunday Times Rich List.