One of Britain's wealthiest places, could soon have a credit union to help tackle debt for hundreds of people.

The city council has produced a feasibility study that says a credit union, which is a locally owned financial co-operative, is viable and would help those ensnared in financial problems.

They are seen as a way to tackle poverty by giving poor people an access to cheap loans and other financial services.

Many people are sucked into crippling debt as they struggle to pay the normal commercial interest rates.

Although Winchester has a reputation for affluence there are thousands of people including pensioners, unemployed, single mums and students living on low incomes.

Credit unions are mutual societies whose members buy shares to build up a pool of funds from which loans can be made.

The interest is limited by law to no more than one per cent a month, so £1,000 borrowed and steadily paid back would cost just £65 over a year, far cheaper than most other lenders.

The study recommends a development worker to co-ordinate the setting up of the union after volunteers set up a steering group. It believes the union would need between 500-1,000 members.

Teresa Kennard, LA21 project officer at the council, said: "Our study has shown there is enough need for a credit union. This is a low-cost way of getting credit. People can get credit all too easily, but it is very high interest.

"The main hurdle is funding the development officer post and getting enough people to pledge to it."

Jenny Meadows, manager of Winchester Citizens' Advice Bureau, said she supported the idea. A quarter of the CAB workload is consumer debt and in the last six weeks 180 clients have used its advice.

" To make it work would we would need about 2,000 people to put money in," she said. "One potential problem is that with unemployment so low and most people in jobs, few had problem obtaining credit even if it soon blights their lives.''

She said: "Experience elsewhere has shown that people use it to buy necessities like beds and buggies for children or cookers."