Plans for a new £22m shopping scheme in Oxford city centre will be submitted next week.

The global private equity firm, the Carlyle Group, is to defy the property slump and global financial crisis by pushing ahead with a major development behind Queen Street.

The scheme will deliver a new open-air shopping centre running from St Aldates Tavern archway to Queen Street, near the Marks & Spencer store.

Nine new shops will be created along with 17,000 sq ft of office space and accommodation for up to 96 students built above the retail space.

Following a consultation period with residents and businesses, a planning application is being submitted for a two-phased project, which Carlyle say will regenerate a neglected part of Oxford's historical city centre.

The development will initially involve a six- to eight-month refurbishment programme of the existing buildings in St Aldates with Carlyle in discussions with Oxford City Council about taking this space.

In the second phase, the existing council offices at St Aldates Chambers will be demolished making way for the new shopping area and offices.

The plans are expected to be considered by Oxford planning committee early next year, with construction likely to take two years.

Mark Harris, director and head of UK asset management at the Carlyle Group said the scheme was sympathetic to the local architecture, while bringing a fresh feel to the area.

He said: "We see this as an excellent opportunity to redevelop a prime part of the city centre and are committed to proceeding with these plans despite the current market conditions.

"Encouragingly, we have already seen considerable interest from potential tenants for this project. We have interest from the council with regard to their office requirements and are in advanced negotiations with two key potential anchor tenants for the retail space.

"The details of these plans have been carefully considered, taking account of a broad range of requirements. Given the strong local support that we have seen for the plans, we hope to be able to commence this exciting opportunity early next year."

The Carlyle Group is a global private equity firm with $89.3bn of assets under management committed to 64 funds. With an entrance to the arcade in Queen Street, the development is certain to re-ignite calls for buses to be taken out of Queen Street.

Ed Turner, deputy leader of Oxford City Council, said the proposals showed that Oxford was still regarded as a powerful retail centre.

The architects behind the scheme Aukett Fitzroy Robinson say they have been studying other shopping areas in the city, particularly the Golden Cross, an arcade created almost 20 years ago linking Cornmarket and the Covered Market.

The news will give city traders a much-needed boost after earlier news that the Westgate redevelopment faces delays.

Already put back until 2012, the Westgate Partnership said both financing and timetable are having to be reviewed.

It is understood that large parts of the site, including the rundown St Aldates Chambers, are owned by Merton College. The scheme is smaller than the plan originally considered 18 months ago, which included an access route to Pembroke Street.

The current Oxford Local Plan describes the site as "a block of land and buildings to the west of St Aldates and south of Queen Street" which offers "an opportunity to create a range of small shops and improve pedestrian links through the site."