A £50,000 compensation package is being arranged for traders whose businesses could be badly hit by a major improvement scheme in Cornmarket Street, Oxford.

Now traders in other parts of the city hit by disruption could ask if they are in line for payouts.

The city and county councils have agreed to spend more than £2m repaving Cornmarket Street. Work is due to start on July 9.

But project leaders are aware that digging up the main shopping street will cause problems for traders - and are setting aside cash to compensate them, if the need arises.

The city council is spending £1.85m on the scheme, with the county council contributing £425,000.

City council officers have built in a £305,000 "worst-case scenario" fund, to cover potential compensation claims - and other problems.

A traders' spokesman has suggested that retailers in other parts of Oxford who have faced disruption could also be in line for payouts.

Graham Jones, a spokesman for Rescue Oxford, which is opposed to the Oxford Transport Strategy, said he did not think £50,000 would go very far among about 40 traders in Cornmarket Street.

"This will be of great interest to traders across the city," he said. "Businesses in Botley Road and George Street may want to consider claiming compensation from the county council for similar disruption because of roadworks."

Amanda Morrison, project manager for the development, said: "It's fair to say that traders will be inconvenienced by what is happening but we have been talking to them.

"Someone will be appointed as a problem-solver, to make sure that their concerns are dealt with as quickly as possible. Making deliveries is a potential problem area because some traders could be forced to trolley their goods 50 yards up the street."

But she appealed to traders not to make compensation claims, pointing out that the work was being carried out for their benefit.

"If there is any money left over once we have completed the project, we would like to spend it on street furniture, but compensation claims could eat into that," she added.

£100,000 has also been set aside in case the arrival of the granite slabs is delayed. And a further £25,000 is available in case the work tdamages cellars.

If compensation payments and other extra costs exceed £305,000, the city council will ask the county council to pay.

The first stage of the work will be carried out from July 9 to October 23. There will then be a break until mid-January, and it is hoped the project will be complete by Easter.

Jean Fooks, the city council's highways chairman, said: "Claims for compensation would have to be very carefully considered. We will do all we can to make sure traders are not inconvenienced."

Work has now started in George Street to fix a broken sewer and could last for 11 weeks. Thames Water has started work in Botley Road earlier this year to replace a water main but most of the work has now been postponed until July 23.