The 15,000 capacity stadium built on the site of Rodney Parade will be home to Newport RFC and the Newport Gwent Dragons.

New training facilities and a clubhouse will be incorporated in the new development. The development will also include corporate box and conference and leisure facilities, which will also be available for community plans.

The announcement follows several months of negotiations involving Newport City Council, Newport Gwent Dragons, Newport RFC, the Welsh Rugby Union as well as developer Edward Ware, consultants Gleeds and architects S&P.

The plans have been fully costed and it has been proposed that the new stadium is funded by a mixture of residential, retail, student and hotel developments to making use of the existing Rodney Parade site.

The new developments will link with the ongoing regeneration of Newport's riverside including the new planned university campus, which is proposed for the west bank river site, which is virtually opposite the new stadium.

The landmark Newport City Footbridge will also create a natural link between the Rodney Parade area and the new retail, leisure and car park developments in the city centre.

Welsh Rugby Union group chief executive, Roger Lewis said: "This new home for rugby in the heart of the city will drive the game forward with the vigour which has helped Rodney Parade become a world famous citadel for sporting success.

"The All Blacks, the Wallabies, and South Africa have all been welcomed to Wales and have tasted defeat at Rodney Parade. It is reassuring to know there are people involved in the game today with the vision to ensure rugby will continue to thrive and develop in Gwent far into the future.

"I have been closely involved in discussions related to the development plans so I know a lot of people have been working extremely hard to ensure this new stadium is built.”

"The game of rugby defines us as a nation and Rodney Parade has a proud place in the history of Welsh and UK sport. The new stadium will boast excellent facilities and that will ensure rugby continues to attract a large and loyal following both on and off the field here in the south east of Wales.”

Subject to planning permission, the new stadium will be open in time for the start of the new season in 2010, before the city hosts the Ryder Cup in October of that year.