A £2 million roundabout with traffic lights will be built on a busy Wolverhampton road as part of plans to open a major new supermarket, it was revealed today.

The island is being lined up for the A449 Stafford Street at its junction with Cannock Road, next to the Peel shopping centre.

Owners of the centre, which has shops including JJB Sports and Focus DIY, want to build a £15 million supermarket that would take over the neighbouring Stratstone Jaguar dealership and create 500 jobs.

With 100,000 sq ft of floor space, the store would be large enough to accommodate a branch of either Tesco, Sainsbury’s or Morrisons.

Peel Holdings, the Manchester-based firm behind the project, owns the Trafford Centre.

It has been considering building a roundabout for three years.

The plans began after it successfully asked the city council to relax restrictions limiting the shops to selling bulky goods.

If it goes ahead, it will mean drivers wanting to head north towards Stafford Road and the M54 will not have to turn left into Cannock Road and take a detour as they do at present.

Gareth Finch, spokesman for Peel Holdings said today: “We are hoping that within the next month council officers will decide whether to nail their colours to the scheme in principle before then presenting the scheme to planning committee.”

He said that the supermarket could resolve the long-running battle between Tesco and Sainsbury’s over the right to build a store on land in Raglan Street, Graiseley, which they jointly own.

Mr Finch added: “We believe it makes complete sense, not least because we would be providing either of the companies involved in the dispute over Raglan Street with an alternative site in a way that means they would both win.

“We do not know of any other city of the size of Wolverhampton where residents still have to make do with such limited and dated supermarket provision,” he said.

Stratstone Jaguar spokesman David Bell said today: “We are working to find a solution acceptable to both parties and discussions are on-going.”