THE run-down historic heart of Glasgow is to be transformed by a (pounds) 30m shops and housing development.

It is hoped the mixture of shops and apartments at Glasgow Cross will help regenerate the area and broaden the boundaries of the Merchant City and build on that area's retail success.

Glasgow City Council yesterday granted planning consent for the development on derelict land at the border of the east end which will become the project's cornerstone.

Restaurants, coffee houses, modern art galleries and designer shops, flats and car parking spaces will be built in an area written about by Sir Walter Scott and once notorious for public executions

Andrew Borthwick, director of Alba Town, the site's developers, said: ''We are now involved in creating a new beginning for Glasgow Cross.''

He added: ''The area has had a lift both socially and economically in recent times and I believe this development will go a long way in rejuvenating the area, reinforcing the current trend of people living in the city centre.''

Work may begin within two months on the land, between Bell Street and High Street, but will be transformed to create 170 two and three-bedroom apartments and shops.

Siroos Gholami of Gholami Baines, the architect behind the scheme, said the development on the former site of an Alexander ''Greek'' Thomson A-listed building was designed to relate to the existing urban setting.

He said: ''Throughout the design stages we have been conscious of the strong historical significance of Glasgow Cross and believe our finalised design will become a major milestone in reinstating the cross as a thriving centre for urban living and commercial activity.

''Glasgow Cross is the key point to facilitate comprehensive, future development of all the sites to the east. It has always been a gateway to the east of the city.

Keith Buchan, 43, proprietor of Cash Generator, a second-hand shop at Glasgow Cross, welcomed the development.

He said: ''Anything that brings homes and businesses to the area has to be a good thing. The area is a bit desolate at the moment so this could really help bring people in.

''The only problem could be if this project forces house prices up and makes people move out of the area.''

Alvina Ilari, 68, who works in the nearby Val Dora fish and chip shop, said: ''I think this is a good idea as that area has been waste ground for a while.

''There are sometimes people hanging about there and there have been problems, so hopefully this will help.''

Jack McLaren, president of Glasgow Chamber of Commerce, said the council's decision to give the project the go-ahead was a massive boost for Glasgow Cross.

He said: ''From this project, we can expect an increase in property prices for the surrounding area and hopefully attract further investment in retail and business.''

Liz Davidson, of Merchant City Townscape Heritage Initiative, a programme aimed at regenerating the area, said the plans would fill a ''long standing gap site at the heart of the city''.

Construction at Glasgow Cross will be phased over two years with completion expected in the summer of 2006. Alba Town also will build about 112 new flats on a nearby brownfield site formerly occupied by the Daly Metals plant in Upper Bell Street.