The death knell was sounded for Croydon's St George's Walk shopping centre as Government officials gave the go-ahead for it to be bulldozed last night.

The 1960s retail arcade will make way for a new multi-million pound centre with a major department store at its heart.

The plans also include the creation of a new "piazza" in High Street and the alteration of Queen's Gardens to include a seasonal ice rink, a "performance space" and new offices.

The Government's backing for a compulsory purchase order (CPO) for the scheme means shop owners will have to close their businesses and move out to make way for demolition workers.

Many face the prospect of going out of business as business rates in St George's Walk are understood to be some of the cheapest in Croydon. Finding alternative retail space for similar rents is likely to be beyond most.

A manager at Turtle's hardware and DIY store, which has been in Croydon since 1894 and in its current Park Street location since 1964, said: "We are obviously disappointed and now have to look at relocating our store. It is going to affect everyone everywhere, not just the businesses, but the customers as well."

The buildings in St George's Walk have been in need of modernisation for many years and Croydon Council has been trying to work out what to do with it since the 1990s.

The new £500million Park Place shopping centre which will replace St George's Walk was the brainchild of the previous Labour administration.

It has long been rumoured the department store John Lewis would take the prime retail spot in the new shopping centre. But the company is yet to make a public declaration about its intentions.

Minerva, the company behind the plans for Park Place, welcomed last night's decision.

Tim Garnham, development director at the company, said: "This is a significant decision and positive milestone for Park Place. Minerva firmly believes in Park Place and the successful confirmation of the compulsory purchase order brings us and, going forward, our partners Lend Lease, one step closer to the realisation of this important retail led regeneration project for Croydon."

Construction is expected to start in early 2008 with completion forecast in 2011.

Councillor Tim Pollard, Croydon Council's cabinet member for finance and regeneration, said: "We are delighted the CPO has been approved. Park Place is essential for the revitalisation and enhancement of Croydon town centre."

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