Gosport Borough Council has revealed ambitious plans to change the face of Priddy's Hard heritage area and attract 100,000 visitors a year.
Proposals, which include museums, cafes, antique stalls, conference facilities and craft spaces have just won £525,000 backing from Europe.
The grant comes from a special fund for areas affected by the downturn in the defence industry. It will be used to develop infrastructure at the site, such as internal roads and car parks at the 25-acre area which includes listed buildings and a large conservation area.
But the council has not been lucky in seeking matched funding from the government.
Marketing director Michael Nutt said the council was now hoping private finance would step in to make its dreams of a tourist hotspot come true.
The plans could take up to 20 years to be realised.
Mr Nutt added: "Proposals for housing will not be accepted as the heritage area is not intended for residential use."
It is alongside the new housing developments, which will eventually provide around 700 new homes.
Residents in the newly-developed flats and houses will be able to stroll out of their doors and find themselves in an area steeped in history.
David Ottley, head of planning at the council, said: "There won't be extensive retail developments in the heritage area. They have been ruled out to protect the town centre, in line with council and government policy."
Planners have dictated the only shops will be a few convenience stores sited on the housing complex.
Millennium Commission funding will pay for features linked to the heritage area, such as a waterbus pontoon, a bridge over Forton Lake and the millennium promenade.
It is hoped that these and a people-mover vehicle will take Priddy's Hard residents into Gosport to shop and visitors from the town to the heritage area.
Close ties with Portsmouth's heritage area should boost tourism even more. The development framework document will be discussed by councillors at the planning and transportation committee meeting at the town hall on Tuesday.
But a note of caution was sounded by Gosport Society chairman Lesley Burton.
She said: "We watch developments at Priddy's Hard with interest and rising desperation and wonder 'Will it ever happen'.
"I think they've over-egged the pudding. The area has access problems and I think they should open up the harbour to the people of Fareham and Portchester, not just Portsmouth.
"I would like to see a ferry from Port Solent rather than more cars on the road."
She added that the troubled times the Royal Armouries museum in Leeds was going through was not a good sign for the planned naval armaments museum at Priddy's Hard.
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