A NORTH-East firm said a contract with the US Navy to break up 13 obsolete warships would bring jobs to the region.

Able UK hopes to sign a contract with the US Maritime Administration within the next few days.

Peter Stephenson, managing director of the Billingham company, said the deal would create 200 posts.

The ships would be broken up at the Graythorpe yard, Hartlepool, after being towed across the Atlantic. But environmentalists fear the move threatens catastophe.

The hulks, decommissioned from the US Navy, would be towed through the Pentland Firth between the mainland and Orkney and down Scotland's east coast.

Greenpeace's international toxic and demolition expert Frank Petersen said: "America is using Britain as a dumping ground. We have a huge concern it could be the start of a nightmare."

There was a ban on the obsolete ships, dubbed America's Ghost Fleet, from leaving US waters until a month ago.

President George Bush has had this overturned. Now the fleet - made up of warships, tankers, bulk carriers and tank transporters - is poised to leave its anchorage on the James River and head for Britain.

Mr Stephenson said his dismantling and recycling facility at Graythorpe was "the most environmentally friendly facility, anywhere. Nowhere can touch this facility".

He said it would be the largest recycling contract ever signed.

Most ships are sent to the Far East to be broken up.