Tesco today unveiled plans to transform Wolverhampton’s landmark Royal Hospital site with a multi-million pound store development that will create more than 600 jobs.

But it is believed the retailer will block plans by rival Sainsbury’s in another part of the city if the council does not grant permission for the project.

In a letter to Wolverhampton City Council leaked to the Express & Star, Tesco states “it goes without saying” that permission for a store at the Royal Hospital site “will pave the way for resolving the impasse at Raglan Street”.

It emerged last week that an agreement has been made in principle for Tesco to sell off its 10 per cent share of Raglan Street in Graiseley to Sainsbury’s, which owns 86 per cent.

Tesco development executive David Hall writes in the leaked letter: “My company has agreed to lodge a planning application for a major new superstore.

“This will enable the refurbishment of the Royal Hospital building and over 600 new jobs will be created for local people.

“The effect of this development as a catalyst to the regeneration of the surrounding area cannot be underestimated.

“The aim will be to build a high quality mixed-use development which is respectful of the character and appearance of the Royal Hospital building.

“We intend to submit a planning application by April.

“In view of the fact we own the site and there are no issues associated with securing vacant possession, we hope to be in a position to secure planning permission and commence work on site by the end of the year.”

Tesco had wanted to build a supermarket on the Royal Hospital site in All Saints in the first place, but following talks with the council it agreed instead to oversee a £50m transformation of the site into a base for the city’s primary care trust and create a supermarket at Raglan Street, which Sainsbury’s had already earmarked for a store. It sparked a battle that has lasted more than 10 years and a string of courtroom showdowns.

The primary care trust plan is no longer on the table because the organisation is being axed by the Government and Tesco has now gone back to its original plan for the site.