A historic Wickham water mill is to be turned into a storage area for antique furniture.

The Chesapeake Action Group (CAG) has described the county council's decision to sell the lease to Taylor Haimes Ltd as a victory of commerce over the community.

Chairman the Rev Geoffrey Morrell was disappointed that the group's proposal to turn the landmark building into an American naval museum and heritage centre had been turned down.

He said: "I am not surprised but it is very disappointing.

"When we submitted our plans last month for the Chesapeake Mill we were not given the chance to present them face to face with councillors.

"The council has missed out on a very big opportunity to develop the mill for the community in favour of a short-term solution."

Hampshire County Council allowed an extra two months after the original closing date had passed for the CAG consortium, made up of international academics and museum workers, to submit its heritage bid.

But yesterday council leader Ken Thornber announced the lease of the Bridge Street Grade II listed building would go to Taylor Haimes Ltd for the restoration and sale of antiques.

The county council, which took over the mill five years ago, will keep the freehold of the building.

The new leaseholders have pledged to provide a museum area and allow organised visits inside.

The company will also have to carry out about £1m of repairs to the mill, built in 1820 from material salvaged from the Chesapeake boat captured during a trade war with the British in 1812.

Councillor Thornber said: "The county council has extensive experience of re-using such facilities and the proposals of CAG failed to provide conclusive information as to how a viable operation would be funded."

He added that the bid by Taylor Haimes Ltd would provide the finance necessary to carry out repairs.

"I hope that the heritage group will recognise that the historical integrity of the building will be protected, its fabric restored, access provided and an area made available for a museum."