A rail town's £6m dream of winning back its place in steam history was given a major boost last week.

The Heritage Lottery Fund (HLF) announced initial Stage One support for a £4.57m bid from Shildon to set up an off-shoot of York's National Railway Museum housing up to 70 of its vehicles.

The new 6,000 sq metre centre would be built next to the famed Timothy Hackworth Museum and could attract up to 40,000 visitors a year - bringing spin-off benefits to Shildon and region's whole tourist industry.

Now the HLF wants to see detailed plans before giving the project its final blessing in time for a start date in 2002.

The rest of the £6.1m cost would come from Sedgefield Borough Council, which has earmarked £600,000 over two years, Single Regeneration Budget funding of £200,000 and potential grants from European coffers.

Coun Brian Stephens, leader of Sedgefield Borough Council who submitted the bid with the NRM, said: "This is great news for the people of Shildon and South West Durham.

"If the project wins final approval from the HLF, it will put the area firmly on the tourist map as a railway heritage destination worth visiting."

Viewing the site, NRM director Andrew Scott said: "It will be a place for housing railway vehicles, because we have 280 at York and room for barely half of them. But it will be designed with visitors in mind."

He urged a note of caution as the Heritage Lottery Fund had only agreed its £4.57m contribution in principle, and will not confirm it until detailed plans are submitted in a year's time.

"But we are absolutely tickled pink, because it is a tremendous vote of confidence in the project and in Shildon," said Mr Scott.

The most exciting aspect of the plans is that, when the NRM at Shildon is complete, it is hoped to run special trains between it and Darlington's North Road Museum, so that the Stockton and Darlington Railway begins to develop a tourism strategy.

"The most unglamorous exhibit they will see will be an unrestored 19th Century freight wagon, but there will also be the prototype for the thousand 1970s coal wagons that were built in Shildon," said Mr Scott.

"There will be five royal carriages of varying vintage, a couple of steam locos and the 1960s experimental jet-powered tilting train which still holds the British railways speed record of 160mph."

NRM head Andrew Scott said: "We now need to get down to the serious job of making the dream a reality.