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An exemplar eco-housing development on the Isle of Wight has been given the go-ahead in a move that the local council says will mean 1,000 homes being built despite the credit crunch.

The council has approved the Pan Regeneration project at Newport, and says that it will receive 拢9m from housebuilder Miller Homes for the site, as well as a range of community benefits.

The development will be built to above level four of the Code for Sustainable Homes, with heating provided by an on-site biomass combined heat and power plant.

The council said it would receive the cash from Miller Homes 鈥渄espite the credit crunch and its detrimental effect on the construction industry鈥�, having consulted agent Knight Frank to get the best possible deal in the economic climate.

Some 240 of the homes will be affordable.

George Brown, Isle of Wight council cabinet member for economy, planning and property, said: 鈥淚t is a great credit to all those involved in this scheme that this agreement has been drafted.

鈥淎t such a difficult time for the construction industry, to have an agreement where all the original scheme objectives can be met is tremendous testament to the hard work of all.鈥�

The council said that phasing of the scheme is under discussion but it hopes to have the first homes completed by 2010.