Southampton is to have close-up, grandstand views of some of the world's most famous ships with the construction of a third cruise terminal in the port.

Record-breaking demand to bring luxury cruise vessels to Southampton means the docks have to have more facilities to deal with the hundreds of thousands of passengers who now pass through the port.

Capable of berthing the largest cruise ships sailing, the new terminal will provide that much-needed extra capacity and its position at 101 berth, next to Mayflower Park, means Southampton people and visitors will be able to have a spectacular vantage point to watch vessels arriving and departing.

The major boost for the city, signalling extra jobs and even more cash for the local economy, was announced today by Associated British Ports, owners and operators of the docks.

Southampton is already the UK's number one port for the rapidly expanding British cruising industry but this new terminal will strengthen the city's tight grip on the multi-million pound business.

The £1.5m terminal will be built on the site of the former banana ship berths and will become a key feature on the city's waterfront.

More and more cruise ships are setting a course for Southampton and next year more than 200 separate calls, the highest figure in recent times, have been booked by vessels wanting to use the port's facilities.

This year Southampton Docks handled more than a third of a million passengers and this total is set to rise further during 2003.

Andrew Kent, ABP's port director in Southampton, said: "We are fortunate to have existing buildings alongside a deep-water quay which can be adapted to provide a first-class facility capable of handling the largest cruise ships.

"This new facility is a further investment by ABP in Southampton's success and will bring substantial benefits to the region's economy.''

The third terminal means Southampton will have some of the most up-to-date dockside passenger facilities anywhere in Europe.

Construction of the third cruise terminal is expected to be completed during the course of next year.

As ABP revealed its future plans, construction work was already well under way re-shaping The Mayflower Terminal at 105 berth, while over in the Eastern Docks the Queen Elizabeth II terminal is set to undergo a major make-over.

The Mayflower Terminal project will result in a totally new look and expansion of passenger facilities at 106 berth in readiness for the addition next May of two new Southampton superliners, Oceana and Adonia, to the P&O Cruises' city-based fleet operating alongside Aurora and Oriana.

The re-development of the Queen Elizabeth II terminal at 38/9 berth is part of the preparations for the arrival of Cunard's massive 150,000-ton liner Queen Mary 2, the biggest and most expensive passenger ship in history, in December 2003. QM2 is due to sail from Southampton on her maiden voyage in January, 2004.