Work on a £700,000 project to transform a former mill building near Ludlow Castle into a tea room, craft workshop, offices and community meeting place is due to start soon.

The dream scheme has been made a reality with £354,440 project funding from Advantage West Midlands' Market Towns Initiative, developed through the Ludlow Marches Partnership.

Objective 2 has also provided £237,667 of funding through the European Regional Development Fund, via Shropshire Tourism Action Plan and operated by Shropshire County Council.

Some £50,000 in funds raised from local people by Dinham Millennium Green Trust will provide a major further contribution to the funding package.

The result will be that The Mill On The Green, will be brought back to life, with a mill wheel reinstated.

Philip Roberts, partnership director at AWM, said: "We are very pleased that the project successfully combines a sensitive renovation of the building to provide community benefits with uses that meet the Agency's economic development objectives.

"The refurbishment will open up a new tea room, provide community meeting space and restore the water wheel, as well as providing new office space that will house a local business. Together the tea room and office may provide for up to 14 new jobs.

"The Mill On The Green is currently an eyesore in an otherwise beautiful part of Ludlow, fronted by the Millennium Green and the River Teme, and overlooked by the castle."

The former mill building, which has also been swimming pool changing rooms, was part of the property purchased by Dinham Millennium Green Trust from South Shropshire District Council in 1999. The site was developed as a Millennium Green by the trust in the year 2000.

Trust chairman Paul Nicholls said: "Obviously we are delighted that close scrutiny of our plans has led to AWM and ERDF expressing such confidence. We are confident of providing Ludlovians and visitors with a valuable addition to the attractions of the town.

"Historically this site on the River Teme was of enormous importance to Ludlow's industrial prosperity. We shall seek to highlight that past with pictorial displays and, may be, working water-powered models inside the Mill."