The Ministry of Defence launched its formal call for competition under Project Connaught on February 11 — and confirmed which areas of the town are likely to be sold off for housing.

Montgomery Lines and areas in the southern end of the military town are all set for the chop under a contract worth an estimated £1.2billion over 30 years.

If previous interest is anything to go by the MoD will be swamped with offers from private companies to rebuild and manage Aldershot's military estate.

An invitation for initial discussions was made in December and saw officials flooded with requests for information from more than 100 companies and consortia.

Philip Blackmore, assistant director of Project Connaught, said: "There is a lot of interest from industry. Some consortia are already in place and they will be delighted that the project has been given the green light.

"They are blue chip companies. They are the big players in the market place for construction and the delivery of management services."

Advertisements will now be placed in the Official Journal of the European Union and an industry day will be held at London's Docklands on February 26.

The MoD hopes to shortlist three consortia by this summer and will enter into negotiations with a preferred bidder by the middle of next year.

The government wants to rebuild and refurbish military accommodation across Aldershot and Salisbury Plain while also meeting the needs of the government's strategic defence review.

New barracks will be built under a private finance initiative, providing single living accommodation and en-suite facilities for more than 10,000 soldiers across both garrisons.

Up to £400million will be spent on capital programmes in Aldershot, with the remainder of the £1.2billion going on long-term management services.

Mr Blackmore said: "The improvements that are coming along will benefit everybody within the Aldershot garrison — those who live as well as work here.

"The next 30 years are going to see Aldershot change significantly from that which we see today."

But the rebuild will come at a price with up to 250 acres of prime Army land being sold off, raising around £130million toward the scheme.

Most of that land will be concentrated at the southern end of the military town, with the ageing Montgomery Lines and surrounding area demolished and replaced with private housing.

But Mr Blackmore said the land sale would help the Army achieve "greater efficiency" on the estate.

"What we will have is a more compact, modern, well-maintained garrison, which remains fit for its purpose for the next 30 years," he said.

But he stressed: "We are committed to Aldershot remaining the home of the British Army, and that's from the minister downwards."

Work is scheduled to start in April 2004 when the current management contract for the military town expires.

"That is a key driver date for us and our timetable is working toward that," said Mr Blackmore.

The new accommodation will be welcomed by Aldershot's soldiers, who are currently living up to eight to a room in decrepit buildings.

Conditions in Montgomery Lines are so bad that some Welsh Guards are living there rent-free.

Colonel Amédée Miéville, Garrison Commander at Aldershot, said: "We are delighted to see the capital projects are going to come on line because there is no doubt that they are needed, particularly the single living accommodation.

"The exciting thing for us is that we are going, at long last, to see the appalling single living accommodation of some of the soldiers replaced and the overall infrastructure of the town rebuilt."

If the PFI proves too expensive, the MoD has vowed to carry the project through using its own finance, although progress would be made at a slower rate.