HOPES of setting up a base for dismantling so-called Ghost Ships in the North-East received a boost yesterday when the Government said it was keen on the idea.

The Department for the Environment also revealed it had ordered a study to find out where a ship recycling centre should be developed in Britain.

And it said it was willing to pump European and national funding into the best-placed facilities to start the project.

An inquiry by a committee of MPs has already concluded that Able UK's yard at Hartlepool is the "closest to having the facilities and expertise" to dismantle ships.

It made the town the favourite to attract the ship recycling industry, expected to be worth £3.5bn by 2010, the date by which most of Britain's remaining single-hulled tankers must be dismantled.

Now, in its response to the committee's report, the department has thrown its weight behind a dedicated recycling base.

Ministers wrote: "The Government is keen to see the establishment of high-quality ship recycling facilities in the UK.

"Although each recycling proposal will continue to be considered by the regulators on a case-by-case basis, this should not impede the development of such facilities.

"We believe that the UK has the skills base and expertise to operate such facilities safely and that such an industry can offer economic benefits to communities."

Able UK's site at Graythorp hit the headlines when four defunct US ships were towed there for scrapping in 2003.

That led to the revelation that Britain's own toxic ships - most of them Royal Navy vessels - were being ripped apart in dangerous conditions on beaches in India and Pakistan.

Hartlepool Borough Council, Tees Valley Regeneration and Stockton North MP Frank Cook have all called for a dismantling centre on Teesside.

And Able UK has revealed it is in negotiations with the Ministry of Defence to scrap two warships at Graythorp.

Although the US Ghost Ships sparked protests from environmental groups, Greenpeace also believes Britain should clean up its own mess and not send its ships abroad.

But the Government agreed with the committee that ship recycling could be successful only with international agreement, working through the International Maritime Organisation.

And it warned it could not order that all Royal Navy ships be dismantled in this country, because a UK-only policy would be illegal under EU law.

Mike Childs, campaigns manager for Friends of the Earth, said it still remained opposed to importing ships from foreign countries.

He said: "We remain convinced that each country should dispose of its own waste."