Construction at the site of the former coal-fired power station could start as early as next year, with full commercial operation expected in 2011.

The new power station will be rated at around 25MW and will produce enough power for approximately 40,000 homes by burning recycled wood in the state-of-the-art facility.

Dave Rogers, E.ON's regional director for climate & renewables, said: "We're delighted that the City Council has given us the green light to develop this project.

"Biomass power stations offer us an exciting opportunity to help combat climate change by using ‘carbon neutral' products in the place of traditional fossil fuels to generate electricity - further proof of our commitment to changing energy in the UK."

The plant will displace the emission of around 80,000 tonnes of carbon dioxide every year, the equivalent of taking more than 20,000 cars off the UK's roads each year, by burning recycled wood in place of traditional fossil fuels like coal and gas.

Blackburn Meadows is the second of E.ON's biomass developments in the UK.