THE Government last night dealt a further blow to plans to bring 7,000 jobs and millions of pounds worth of investment to the region.

The Department for Transport approved plans for the third port expansion in the South-East, throwing question marks over Teesport owner PD Ports' plans to expand.

PD, which wants to invest £300m in a new container terminal, has been lobbying the Government to halt port expansion in the South to allow northern ports to grow.

But yesterday, the Department for Transport approved Hutchison Ports' plans to expand the Port of Felixstowe. It has said it was "minded to approve" ports in London and Harwich.

PD's group development director, Martyn Pellew, said last night that the decision could throw doubt on the extent Teesport would be able to expand.

But he said it was crucial for PD Ports to get the backing of shipping lines, which would ultimately be the customers of the expanded port.

He said: "We are calling on the Government to reassure the North-East that this decision to allow expansion in the South does not signal the death of the Government-backed Northern Way strategy, designed to help close the £30bn output gap between the North and the rest of England."

Stan Higgins, chief executive of the North-East Process Industry Cluster, which represents hundreds of chemical companies in the region that use the port extensively, said he believed Teesport would still expand, despite the Government's decision.

"Whatever the Government thinks, Teesport is the best-placed port for expansion into accession states in Europe because of its access through the Baltic," he said.

The Department for Transport said that, legally, it had to make a decision on the three existing planning applications before it considered any strategy for port expansion.

A spokesman said a National Ports Strategy would be ready by June, allowing more balanced expansion.

Mr Pellew said PD's planning application would be submitted to Government by March and he hoped it would go through quickly.

Melanie Laws, director of the Association of North-East Councils, which has backed Teesport's plans, said: "We are surprised and disappointed at this announcement, as it appears to run completely counter to the Government's own Northern Way growth strategy, which seeks to create regional balanced growth and address regional economic disparities."