Stokesley Manor House and Springfield House must be sold, as a contribution toward the proposed £7m library and elderly peoples' homes complex at North Road.

North Yorkshire County Council will invest £3m in the scheme but this week emphasised the need to sell the two sites.

It agreed proposals for the jointly-run complex near the disused bus station. Working with Hambleton Council and Broadacres Housing Association, it said the new development would replace Stokesley's outdated residential home and library.

The Rev Brian Mayne, Broadacres Housing chairman, said he was delighted with the proposals and Coun John Dennis, county executive member for libraries, added: "The town will have a much improved library, with extended opening hours, increased services and expanded, free access to computers and internet facilities."

More announcements are expected later this month, and confirmation and final funding decisions are expected from the other organisations.

The scheme is subject to the usual planning process and the formal application is due within weeks.

Coun Murray Naylor has executive responsibilities for social services. He said the scheme met modern Government standards, adding: "This agreement will allow us to make a real step forward in providing current and future generations of older people with the accommodation and care services they want and deserve."

Hambleton Council deputy leader Coun Arthur Barker said: "The district council is very keen to see this move forward. We'll be very much involved in the running of this for the benefit of Stokesley."

The county's North Road highways depot is moving to the Ellerbeck Court Industrial Estate and work at North Road could start in the autumn.

A public meeting was held at Stokesley Town Hall last year, when concerns over traffic congestion and pedestrian access were voiced.

A series of amendments have been made taking account of the comments and revised plans will be publicly available later this month.

The county said discussions had been held with Stokesley Parish Council about the new complex, the Manor House and Springfield House. It said the sites must be sold as a contribution to the funding.

Part of the old highways depot site is being sold for housing and is likely to be developed by a major house-building company.