Oxford's Peers School has been given the thumbs-up by the Government to become the city's first flagship academy.

The Sandy Lane school could close and reopen as an independent academy in a £30m project, backed by the Diocese of Oxford.

It has also emerged that Oxford Brookes University, Oxford & Cherwell Valley College and BMW are involved in the plan.

The Department for Education and Skills (DfES) has backed the idea and a consultation will now begin with the local community.

Peers headteacher Lorna Caldicott said: "The academy is not 100 per cent guaranteed, but the people involved are optimistic it will go through.

"It's obviously a very exciting opportunity and would be a huge boost for the future of education in the area."

The academy would be a non-selective secondary school on the Peers campus for pupils aged 11-19. It would specialise in maths, IT and sport and is aiming to take in its first pupils in September 2008.

The plans could also see new school buildings, costing £22m, opening in September 2010.

Ms Caldicott said: "This would be hugely significant for Oxfordshire. It would be the first time for many years that a new school has been built.

"It's a significant investment in education and, if done well, lots of people stand to benefit."

Academies have been launched across the country aimed at ramping up exam results at poor-performing schools.

Daniel Webb-Jones, spokesman for the DfES, said: "Peers School in Oxford is an underperforming school serving a disadvantaged community.

"Its transformation into an academy would represent an important opportunity to turn it into an effective community school."

The team behind the academy's plans had to submit an expression of interest to the DfES, which was returned with positive feedback.

It is now thought a feasibility study will be carried out with the consultation process over the summer.

Nicola Sheldon, chairman of governors at Peers, said: "It's a sign of confidence and a real boost to have the Government's backing. We could have a wonderful new school. The sponsors have been working hard to get their funds together, so everyone involved is pushing for it."

Two project management teams are ready to take the plans forward - one from the DfES and another run by consultants on behalf of the Diocese, Brookes and the other partners.

Mrs Sheldon said: "The teams wil put together a report which assesses whether it's viable to go ahead. Initial assessments of the building potential have been positive and we know we can put a new building on the site."

The school would be able to cater for up to 210 children in each year group.

The Rt Rev Colin Fletcher, the acting bishop of Oxford, said: "I am delighted to hear of the progress of this scheme. It is an exciting project with our partners in business, the city and county."

Hilary Lowe, academic development director at Oxford Brookes, said: "Our role will be in a number of areas which include professional development for staff, pupil-focused opportunities at the university, and advice and consultancy on curriculum and leadership development."