The first steps have been taken in the £10m redevelopment of a Teesdale community hospital.

Yesterday, Iris Hillery, the chairman of the Friends of the Richardson Hospital, in Barnard Castle, formally started work on the building by digging the first sod.

The hospital, which is due to open in 2007, will be situated on the site of the old Barnard Castle Health Centre.

Mrs Hillery said she was very pleased the facility was coming to the town and said once it was completed the Friends would continue to play an active part in fundraising.

She added: "I am delighted that building work is beginning on this project.

"This new Richardson Hospital will benefit a great many local people over the coming years, and I look forward to seeing the finished product in 2007."

Andrew Young, the acting chief executive for Durham Dales Primary Care Trust, said: "The new hospital will provide a modern facility with a pleasing and attractive environment for patients.

"It will also have the potential to help us develop a much wider range of services for the people of Teesdale such as rehabilitation, palliative care, chronic disease management, falls service and blood transfusion, and these are areas that we will be looking to develop in preparation for the new hospital opening in 2007."

The redevelopment is being funded through Care Partnerships 25 Ltd, a joint venture company owned by the public and private sector.

Following the sod cutting David Anderson, the hospital's modern matron, and Christina Haworth, director of nursing at the PCT, presented a cheque for £306 to the Friends of the Richardson Hospital. The money was raised by NHS staff on the Great North Walk.