An historic site that was Brighton's answer to a red-light district 200 years ago is to be given a new lease of life.

The infamous colonnade in New Road is to be rebuilt as part of a £1 million housing and restaurant complex.

The colonnade was built in 1806 and became a notorious haunt of prostitutes at theatre and music hall closing times.

The ornate white columns were pulled down in the Twenties when the road was widened and only a small section remains outside the Theatre Royal.

Now work has started to recreate the grand walkway as part of the development of the empty and derelict premises at the corner of New Road and North Street.

The property owners, London Merchant Securities, and project leader Urbanfirst, are refurbishing the prime city centre site into ten flats and premises for the Quod restaurant chain.

Quod, run by Brown's restaurant founder Jeremy Mogford, has branches in London, Oxford and Birmingham and chose Brighton for its fourth opening. The restaurant, including a deli and cafe, will seat about 140 people and create up to 60 jobs.

With the refurbishment of the Dome, the Theatre Royal, a new library just around the corner and the possible expansion of the Komedia theatre, it is hoped the New Road area will become the city's new cultural quarter.

Rod Pearson, director of Urbanfirst, said: "The flats are all about town living, which is happening all around the country.

"People want to live in the centre of cities. This is going to be a very buzzy corner and the cultural heart of Brighton."

Mr Pearson was stunned when he discovered a 1913 copy of The Argus stuffed in the floorboards of the empty building and said it helped him realise the history behind the site.

He said the colonnade and building, which are both listed, would be rebuilt to a high quality.

There will be no parking spaces provided for the occupants of the rented flats but Mr Pearson said the properties were aimed at young professionals living and working in the city, who would not necessarily want to have a car.

Tony Mernagh, city centre manager, praised the project which he said would make a huge difference to the area.

He joked: "We know what the colonnade used to be used for but I don't think that is going to be revitalised. That was in the days when they didn't have massage parlours."