Oxford University says it is ready to spend £240m to transform the Radcliffe Infirmary into the university's campus in the city centre.

The bill for the first new building to be erected, the Institute of Mathematics, is expected to be in the region of £40m.

The university is now in the process of choosing an architect to produce a masterplan for the 10.5-acre city centre site.

And it plans to hold an international competition, being run with the Royal Institute of British Architects, to attract the best designs.

Architects have been told the site must become "part of the must-see list in Oxford" and a major new showpiece.

It will also be the main focus of university plans to expand teaching and research facilities over the next 20 years.

The university has set out its vision for the Radcliffe Infirmary site for the first time in its guidelines to architects.

The site will effectively serve as Oxford University's main campus, housing academic departments, administration offices abd research facilities.

It will also serve as the central teaching space although it is unlikely to include significant laboratory accommodation.

A university spokesman said: "For the university, the acquisition of the site presents not only a unique opportunity to consolidate its core activity within the centre of the city, but also a chance to reinvigorate this important site, securing its future as an intricate part of the whole Oxford community.

"The university has a clear vision for the site. "Practically, it must provide expansion space to the university's main activities for the next 20 years.

"Aesthetically, it must be of such outstanding quality that it enhances and contributes to the overall context of the area becoming part of the must see list in Oxford for many years to come."

The university has made clear that the site will be an integrated campus, operating as a whole, rather than a series of individual departments sharing a site.

It says that the use of space must be maximised to provide a minimum of 540,000sq ft of accommodation, possibly with underground buildings as well.

The spokesman said that the university was determined to ensure its new Institute of Mathematics would become a landmark for the site, announcing "the start of the latest phase of the university's long history."

He said: "We are very aware that the scheme will be subject to considerable scrutiny by the local community and the city council.

"Indeed as the site includes the old maternity hospital, many of the residents of Oxford will feel particularly close to the development, having been born on the site."

The university will take possession of the site in 2007, when the Radcliffe Infirmary relocates to a new building being constructed on the John Radcliffe Hospital site.

The university said it was confident the competition would attract entries from leading international architects.