A toy museum plagued by damp and flooding is to reopen after more than two years.

The Sussex Toy and Model Museum, in the arches below Brighton station, closed in November 1998 because it flooded whenever it rained.

Now Railtrack, which owns the site, has agreed to spend more than £100,000 lining the walls to stop the leaks.

It has also agreed to pay compensation to the museum trustees for the costs they have incurred during the last two years maintaining the building and exhibits.

Work on the building is provisionally due to start in early April so the museum can reopen in May or June.

Chris Littledale, founding director of the museum, said: "We are delighted Railtrack has agreed to pay for the work as it will be quite an expensive and complicated job.

"It has taken a long time for us to reach an agreement and we were concerned the museum would have to shut for good."

Mr Littledale, an expert toy restorer, opened the museum ten years ago.

He now ranks his collection of antique trains, limited editions and model cars among the finest in the world.

Kevin Groves, a spokesman for Railtrack, said: "We have used numerous methods to try to locate the cause of the water going into the property but without success.

"We have now come to an agreement to deal with the problem from the inside by lining the walls and introducing a new drainage system. While it does not solve the problem it does provide a solution."