Council chiefs hope the scheme will kickstart a revival of rundown areas of North and South Shore by removing derelict guest houses as well as former hotels which have become bedsits.

As well as rejuvenating the areas, council planning bosses hope the scheme will help provide more affordable housing and tackle problems created by derelict hotels, which residents say lead to anti-social behaviour. New extensions at the hotels would be knocked down – in a bid to restore the resort's original character and create more open space.

Hotels would be bought by agreement or, as a last resort, compulsory purchase order and, if successful the scheme could be extended.

The plans are to be presented to Government-backed English Partnerships, which it is hoped will provide funding, before the end of the year.

Tim Brown, head of planning at Blackpool Council, said: "Guest houses get out of guest house use, predominantly becoming houses of multiple occupation.

"It is not a place people choose to live. It is somewhere people live out of necessity.

"We have a predominance of residential apartments which don't suit the populations of families in terms of one bed apartments.

"It is skewered to a population of single people.

He added: "During Blackpool's heyday every last bit of space was built on and now we have got that development it is a problem."

The scheme will be run along similar lines to a £20m project which was launched in one of Morecambe's most rundown districts in 1998 which focused on an area containing an estimated 1,400 bedsits and had some of the highest unemployment figures in Lancashire.

Claims

Mr Brown added: "English Partnerships recognise the scale of the challenge in Blackpool is several times greater than that in Morecambe."

The plans come following claims that the closure of guest houses in the South Shore is "accelerating the decline" of thriving bed and breakfast accommodation.

Ray Dagwell, owner of the Linton Hotel on Rawcliffe Street, said quick action was needed.

"They come up with all these schemes and take such a long time but Blackpool cannot afford to wait," he said.

"This idea could work but I'd want to know which areas they are talking about.

"In the meantime they have to make sure the existing areas don't become slums.

"Derelict hotels are becoming bedsits and it leads to anti-social behaviour and all sorts of problems and in a holiday resort, that is not what people want to be seeing."

Dave Pass, owner of the Cresta Hotel on Withnell Road, is keen to see the details of the scheme.

He said: "You can't force somebody to keep a hotel if it isn't making any money.

"If a hotel is going for a song and a developer is going to do what he sees fit with it, converting it back into a house is probably a good idea."

Coun Fred Jackson, who represents South Shore's Victoria Ward, added: "This is something that is definitely worth looking into and if it brings the right kind of people and improves the area that would be very positive."