Banbury is to have its own radio station, possibly by 2005.

The Radio Authority has given the go-ahead for a local licence to be issued.

The authority will advertise the licence in September or October next year, and broadcasting companies will be invited to apply for what will be an initial eight-year franchise.

Up to six months will be allowed for bids to be lodged.

The favourite to win the licence is Banbury FM, which ran a one-month trial broadcast last autumn from a mobile studio in the Tesco supermarket car park.

But other companies which run stations in other parts of the country are expected to apply. The town could now see a series of trial broadcasts from interested companies, including Banbury FM, which hopes to be given permission for another spell on the air.

Banbury FM director Andy Green said: "We have the professional backing of the Milestone Group, which runs radio stations in Newbury and Basingstoke. The letters and opinions we received last year have given us a good idea of what Banbury people want.

"Local people have told us they do not want to share their radio with Oxford or anywhere else and we will tailor programmes specifically for Banbury.

"We started the ball rolling. Other broadcasters may jump on the bandwagon but we have the advantage of being local people who know what the town wants." The company has also named a new chairman, solicitor Shaun Jardine.

Mr Jardine said: "I'm delighted to be chairman. The fantastic response of Banbury people to the station's trial broadcast proves the demand from local listeners, community groups and advertisers."

"The Radio Authority's announcement is great news and a big step in the right direction. It's a shame we've got to wait until next September before we can put our bid in."

Kerry Curtis, a spokesman for the Radio Authority, the Government agency that oversees local radio, said: "We now have to choose an applicant to run the station. The company that gets the licence will have satisfied us that they are financially sound, can offer a suitable programme choice and can provide community-based broadcasts."