A housing estate roughly the size of Blackbird Leys looks like being built on land south of Grenoble Road in Oxford.

Last night, the Government gave an in-principle "yes" to a 4,000-home development on the site close to Oxford United's Stadium.

The landmark announcement - which came from the office of Communities Secretary Hazel Blears - was the strongest indication yet that the controversial scheme, opposed by Oxfordshire County Council, could finally start.

For years, city planners fought tooth-and-nail for a massive housing development on the edge of the city limits, arguing there was not enough space in the centre of Oxford. County Hall insisted homes should be built alongside the A34 in towns like Bicester and Didcot.

A 12-week period of consultation will now start before a final decision is made, but one senior Town Hall source said it would probably take a change of Government for the scheme to be scrapped.

The development will effectively become an eco-town, similar to one planned for Weston-on- the-Green, near Bicester, with 40 per cent of the sustainable 4,000 homes to be "affordable".

Oxford East MP Andrew Smith said: "After so much speculation, this is a green light for the principle of housing south of Grenoble Road and welcome recognition of Oxford's desperate need for more homes.

"It must be an opportunity for investment in facilities, for young and old, better amenities and shops so the existing communities benefit, as well as the new."

Stephen Ballard, 44, of Redwood Close, said: "By doubling the size of the Leys they hope to make it twice as nice, but it will be twice as nasty.

"It will become more like a city than an estate."

William Lewis, 61, of Firs Meadow, Greater Leys, said: "I suppose it's inevitable, but it is a great shame to infiltrate so much farmland."

Sam Carton, 34, of Nettlebed Mead, said: "It needs to be done somewhere, but there's not much greenery around here so it will be sad to see it go."

One planner last nightJuly17 said it would probably be another five years before a house appeared on the site.

Overall, 400 homes will be built each year in Oxford until 2026 - 100 a year more than already planned.

Deputy city council leader Ed Turner, board member for strategic development, said: "It appears the green light has been given for development on the edge of Oxford.

"This is a beacon of hope for people who are in housing need in Oxford or who are struggling to get on to the housing ladder.

"We will work with those living on the Leys to ensure this scheme is a real boost to the area."

Oxford's chief planner Michael Crofton Briggs said: "It is our long-held belief there should be an urban extension to Oxford.

"It is important because previous (planning policies) had been set by the county council and had always wanted to contain expansion in favour of putting development in market towns."

South Oxfordshire district councillor and Baldons Parish Council spokesman Elizabeth Gillespie said: "Oxford City Council is to blame for their housing crisis because they have been building businesses on brownfield sites, rather than homes.

"We will continue to oppose this scheme because it is not a sustainable location and is wrong for both the city and the villages."

Oxfordshire County Council leader Keith Mitchell said: "All of the detail in this debate is rendered somewhat academic by the fact housebuilding in this country has ground to a halt."

South Oxfordshire MP John Howell, whose constituency covers Grenoble Road, said: "The Green Belt has a purpose - to prevent urban sprawl - and I can see nothing that undermines that legitimacy."