WORK on a world class' indoor arena on the banks of the Clyde is set to go ahead after backers secured vital funding.

The 12,500 capacity venue at the SECC will be the centrepiece of a £118million development, which will also include a hotel, housing and a new public square.

Scottish Enterprise Glasgow today confirmed it will be contributing £25m to the project to allow construction to start within weeks.

The Scottish National Arena aims to be one of Europe's finest indoor venues and has been designed by architect Norman Foster, who created the SECC's Clyde Auditorium - the Armadillo - and the London Gherkin.

Developers hope the arena will give the SECC more space to stage major conferences and the chance to bid for larger events.

Due to open in 2010, it will be the third biggest indoor venue in Britain and will form part of Glasgow's bid to host the 2014 Commonwealth Games.

As well as the cash from Scottish Enterprise, a further £77m will come from the private sector, £15m from Glasgow City Council, and £1m from the European Union.

Stuart Patrick, operations director of Scottish Enterprise Glasgow, said: "This arena is a vital new asset if the city is to continue to grow as a tourist destination.

"It puts the city in a leading position to capture a bigger share of the conference market, particularly high-spending medical events."

It's thought the new arena will generate an extra £35m a year for the local economy and sustain 1400 new jobs.

Mike Closier, group chief executive of SECC, said: "This part of the funding is fundamental to the construction of the arena and without this contribution from SEG, Scotland would be deprived of a world-class arena.

"This is the news we've been waiting for and it's now a case of full steam ahead with the construction of the Scottish National Arena.

"It will dramatically improve the entertainments experience for concert goers and free up space in the SECC to host more exhibitions and conferences.

"Moreover, it will boost the city's bid to host the 2014 Commonwealth Games and I'm sure it will become the pride of the people of Glasgow and the whole of Scotland."