The company which will fund, design and build Oxford's new £125m hospital, including the city's children's hospital, has been revealed.

The Hospital Company, a consortium led by construction company Carillion PLC and the Royal Bank of Scotland, has won the development contract at the John Radcliffe Hospital, in Headington.

Construction is due to start next summer.

Protesters are angry the development is being funded by the controversial private finance initiative, which means the NHS will pay mortgage fees to the consortium for 30 years.

They have pledged to fight the scheme.

When the building is completed, in 2007, it will house services now at the Radcliffe Infirmary, including ear nose and throat, neurosurgery and opthalmology.

It will have 14 operating theatres, in-patient and out-patient facilities, neuro-radiology and other specialist departments.

The £20m Oxford Children's Hospital will also be built by the consortium.

Health workers union Unison condemned the announcement. Mark Ladbroke, chairman of the Oxfordshire health branch, said: "PFI business consortia, not patients, will have first call on local NHS funding for a generation.

"It will result in cuts in clinical services and support staff being transferred into the private sector.

"Unison will fully support the 300 health workers directly affected in taking action against this threat."

ORH spokesman Helen Peggs said: "We are delighted that our plans to relocate services from the RI and to build a separate children's hospital in Oxford have moved a step forward."