The city council has agreed to provide a £6m loan to the Tattoo, based on income expected to be generated by the event over the next few years. The Tattoo is expected to create a debenture scheme to help make up the shortfall.

The scheme will cut the time it takes to erect and dismantle the spectator stands, to between three and four weeks, allowing the Esplanade to host more year-round events.

McAlpine has been asked to produce detailed designs by the end of the year, with a planning application expected to be lodged early in 2010 after the approval of heritage bodies has been sought.

A spokesman for the Tattoo said: "We are expecting detailed designs to be completed and brought to our board by the autumn and our plan is very much for the new stands to be in place for the 2011 event.

"It is very much all systems go for the project and it is now a matter of steering the project through the planning process, although we will obviously be speaking to a range of stakeholders before an application is submitted to the council."