Campaigners fighting to save a hospital and hundreds of jobs were celebrating victory today.

Multi-million-pound plans to revitalise historic King Edward VII Hospital in West Sussex have passed the final hurdle.

John Prescott's office will not be calling in the controversial application, which includes building hundreds of homes in an area of outstanding natural beauty.

It means a rescue package drawn up to keep the hospital going can now go ahead and 300 jobs are saved.

Tens of thousands of patients from across West Sussex and parts of Surrey and Hampshire use the Midhurst private hospital every year. It went into provisional liquidation almost a year ago, when a consortium including developers and private healthcare company Capio agreed to buy the hospital for an £18 million development project.

Under the scheme the main Grade II listed building would be converted into flats and more than 100 houses built in the grounds.

A replacement 134-bed replacement hospital, specialist neurology unit, health club and 400-space car park are included.

Hospital director of development Tricia Saunders said: "It has been a roller-coaster of a year.

"If it wasn't for the backing of our MPs, hospital friends, patients, staff and the public I don't think we would have got the result we wanted.

"The atmosphere at the hospital since we heard the news has been wonderful. Everyone is just so relieved."

The redevelopment only just managed to scrape past Chichester District Council. earlier this month.

Environmentalists and some councillors said it would cause environmental problems and would be an intrusion on the countryside.

The hospital is on land earmarked as part of the proposed South Downs National Park.