A run-down port is to get more than £100 million for one of the biggest regenerations of the Sussex coastline in history.

Developer Oakdene Homes has paid £11.2 million to buy 19.7 acres of land in Newhaven.

In a move which could have far-reaching implications for house prices and tourism along the entire East Sussex coastline, the company will build at least 640 homes and 30,000sq ft of leisure and recreational facilities.

The news has been welcomed as a sign that the area - which has been in the economic doldrums for decades - could become one of the most prestigious destinations in the South for young homebuyers and London commuters.

The value of the development at Newhaven Marina, West Quay and Railway Quay is expected to reach £150 million.

Planning permission has already been granted for 120 apartments and six shops on 1.5 acres of the West Quay.

Building work is due to start in January and the first home will be ready for people to move in 12 months later.

Further planning applications will be made over the coming months, signalling millions of pounds of fresh investment for Newhaven.

Graham Amy, chairman of the Newhaven Community Development Association, said: "This is brilliant news for Newhaven.

"It will make Newhaven a better place to live, work and visit."

Reigate-based Oakdene said it will retain the existing marina and make improvements to it while developing the West Quay and Railway Quay.

Part of the West Quay is already developed with housing and fishing facilities. Railway Quay, meanwhile, is semi-derelict with a couple of listed buildings that would have to be retained.

Oakdene chief executive Carl Turpin said: "This development is undoubtedly a very exciting project for the company.

"We will look to maximise the full potential of the project whilst focusing on an individual design in keeping with the environment and the lifestyle expectations of the likely purchasers."

The architects behind the project are Brighton-based Morgan Carn Partnership, founded in Hove in 1957.

Community leaders in Newhaven last night heralded the investment as further proof the town is on the up.

East Sussex County Lib Dem councillor for Ouse Valley East, Coun Pat Ost, said: "We welcome anybody prepared to continue regeneration in Newhaven which has been successful to date.

"There used to be a feeling that anything goes for Newhaven but that's certainly not the case now. We are no longer seen as the second best option."

Veteran Newhaven East Sussex county councillor, David Rogers, said: "I think this is the 21st Century part of Newhaven's regeneration programme. What is important in relation to the housing development is that a high percentage of it should be made affordable."

Liberal Democrat MP Norman Baker, whose Lewes constituency includes Newhaven, voiced concern that the sites might be turned into a housing estate.

He added: "While it is all very well to have homes and leisure facilities, if Oakdene think they can turn the place into a housing estate, then I think the planning authority will have something to say about that."