A transatlantic telecom cable linking the UK to the USA is set to be plugged into Northern Ireland at a former military base, it was announced today.

The old Fort George Army and Navy compound in Londonderry has been selected to house the Project Kelvin telehouse, the company delivering the 30 million euro project confirmed.

Hibernia Atlantic said the site on the banks of the River Foyle was the ideal place for the facility. Derry regeneration company Ilex will now apply for planning permission for the development.

The fibre optic cable, which connects England to North America, runs along the seabed. A 22- mile offshoot will now link Northern Ireland to the high speed digital service. The cable was brought ashore in Portrush last month. The telehouse is where it will be plugged into the local telecom network.

A cable is also being brought ashore in Dublin to enhance services in the Republic of Ireland.

The project is jointly funded by the Stormont executive, the Irish government and the EU.

The location of the telehouse has been a source of controversy, with Coleraine having been previously earmarked for the communications hub, before the decision was reversed amid a high profile campaign by political representatives from the Maiden city.

Fort George has already been earmarked for a number of regeneration initiatives.

Derek Bullock, vice-president of Network Operations Hibernia Atlantic, said he was delighted the telehouse was coming to Derry.

"We recognise that Fort George is one of the key locations within the city's regeneration plan as it looks to future growth and prosperity," he said.

"The new direct international link has the potential to be a major facilitator of that growth and in our discussions with ILEX, the Urban Regeneration Company, we have worked hard to ensure that what we propose to build meets the city's expectations.

"It is important that the potential investment for the city through the telehouse and the cable itself is recognised. This is the right location and local businessmen and entrepreneurs can now look to the future where there will be a new wealth of capacity and the ability to directly and securely connect to Canada, the US, GB and mainland Europe."

Stormont's Social Development minister Margaret Ritchie and Enterprise minister Arlene Foster both welcomed the announcement.

"The construction of the Project Kelvin telehouse will represent the first physical development on Fort George and I hope it will be followed by many more major developments as we continue to advance our vision of making this site an economic driver that delivers jobs and prosperity for the people of Derry and the North West," said Ms Ritchie.

Ms Foster said: "This decision, the result of the private and public sectors actively working together, is an important milestone in the roll-out of Project Kelvin.

"Hibernia Atlantic now has a very promising location for its Londonderry facility and its position will enhance the attractiveness of the overall Fort George development to both local businesses and potential overseas investment.

"This flagship project is one of a number of actions being taken under the Programme for Government to capitalise on Northern Ireland's world-class telecommunications infrastructure.

"In these challenging economic times it is more important than ever that the private and public sector work together to maximise the benefits of this investment.

"I wish both Hibernia Atlantic and ILEX well in the next stage of the construction of the Telehouse and hope to see the overall project delivered on schedule for the benefit of the whole of Northern Ireland."

Now a site has been identified, Hibernia Atlantic has to submit a proposal for approval to Ms Foster's department and the Irish Republic's Department of Communications, Energy and Natural Resources (DCENR).