A finance deal has been struck for the Nuffield Orthopaedic Centre's new £35m hospital, allowing construction to start next month.

Plans for the state-of-the-art building were revealed after the Private Finance Initiative, sealing the deal to fund the project, was confirmed on Friday, April 19.

The new building is due to be completed in early 2005, and will completely replace the old 1930s NOC at its present site in Windmill Road, Headington, Oxford.

It will have 134 inpatient beds, a children's unit, six operating theatres, a new imaging centre for X-ray and MRI, and new facilities for outpatient and therapy services.

The radical snail-shaped building was designed by architects RTKL to meet the needs of the hospital's specialist bone services for patients.

NOC chief executive Ed Macalister-Smith said: "With the negotiations successfully concluded the future looks really exciting for the Nuffield Orthopaedic Centre.

"We will now be concentrating our energies into transforming our vision for the new hospital into the realities of providing the best possible care for our patients and the best possible environment for our staff."

Funding for the new hospital is being provided by private consortium Albion, which will pay for the construction and act as landlord once it is built.

The NHS will pay "rent" for 30 years to the consortium, which is made up of construction company AWG, Group 4 Falck United Medical Enterprises, and Barclays Capital. After 30 years, ownership passes to the NHS.

NOC chairman Joanna Foster said: "The successful conclusion of this agreement underlines our belief that working together with other organisations enables us to develop the highest quality healthcare."

The redevelopment was only possible because of a £6m contribution from the NOC Appeal Committee, a charity chaired by former Tory Cabinet minister Lord Tebbit.

He said: "Only the extraordinary generosity of many individuals, charitable trusts, patients and others has enabled this scheme to go ahead. Our next objective is a new hydrotherapy pool to complete the hospital rebuild."

The new hospital is one of four new development projects at the NOC site, including the £9m Oxford Centre for Enablement, which is now completed and will bring together services like Rivermead Rehabilitation Centre and Ritchie Russell House.

Oxford University Institute for Musculoskeletal Sciences, funded with £4m from the NOC Appeal Committee, was finished in February. It provides facilities for 100 scientists studying medical and surgical treatment for bone and muscle diseases.