An historic hospital looks doomed to close even if controversial plans are approved.

Thousands of campaigners were given hope yesterday when a project to revitalise the King Edward VII in Midhurst was recommended for approval.

The scheme includes converting the main site into flats, building a replacement hospital and creating more than 100 homes to the north.

The final decision will be made by a full meeting of Chichester District Council on Tuesday.

But if the application is given the go-ahead it is almost certain to be called in by Secretary of State John Prescott because the site is in an area of outstanding natural beauty and earmarked to form part of the proposed South Downs national park.

If this happens then the private hospital will close.

Liquidators called in a year ago, after it spiralled millions of pounds into debt, say they will not be able to keep it going while the application is being investigated.

Hospital director of development Tricia Saunders said: "The office will make a decision whether or not to call in the plans within 28 days if it is approved on Tuesday.

"If it is called in, it could take between 18 months to a year for a result and that is just not an option for us.

"If the application is called in then the hospital will close. We are pleased it is being recommended for approval but there is an awful long way to go."

A consortium of developers and private healthcare company Capio drew up the plans, which they said would secure the hospital's future. The plans include a 400-space car park, health club and neurological unit.

If it closes, more than 300 jobs will be lost and the main building will probably eventually become a smaller number of flats.

Supporters say it is vital for its specialist cardiac and orthopaedic services.

Opponents say the development is an intrusion and there is no convincing evidence of a long-term need for the hospital.

The Sussex Downs Conservation Board says the plans will cause too much environmental damage.

Chichester District Council's planning committee yesterday decided to ignore a recommendation by officers to throw out the application.