A PLAN to create a new east London neighbourhood by transforming a 26-acre, semi-derelict area close the Olympic Park has been announced.

A total of 1,200 homes, 480,000 sq ft of offices, a 350-room hotel, restaurants and shops, in distinct zones linked by car-free walkways are proposed for land between Stratford High Street, the Three Mills Wall River and the River Lea waterways.

Developer Landprop, a subsidiary of the Inter IKEA Group, has purchased nine acres from the Olympic Park Legacy Company to bring the majority of the site under single ownership.

It promises the development will be family-orientated, with 40 per cent of the new homes having three bedrooms or more.

The first phase of development already has planning permission and the area known as Dane’s Yard will be the site of a 40 metre illuminated sculpture in a public square and a restaurant operated by Graysons.

The surrounding area will provide facilities aimed at creative industries and will include refurbished historic buildings.

Harald Müller, Landprop managing director, said: “We have the highest ambitions for Strand East.

“The development will be on a human scale with much of the site characterised by low density town houses and mews homes connected by beautiful public spaces consisting of courtyards and squares, making the most of the waterways which surround the site.”

Mayor of London Boris Johnson welcomed the proposals.

He said: “This is yet another great example of the 2012 legacy rippling out of the Olympic Park and across east London.

“It will help create a vibrant quarter within the brand new district we are creating in London, providing much-needed family-sized housing and new jobs.

“This huge investment shows the extraordinary confidence that exists for both this part of the capital and the future of the whole of London's economy.”

A public consultation will now be launched ahead of the submission of a planning application to the London Thames Gateway Development Corporation early next year.