"This is the news we have been hoping for, " said chairman Sir Timothy Sainsbury, "and follows comprehensive planning, analysis and negotiation."

The investment will lead to dry docking facilities, state of the art paint facilities, construction halls, stores, joinery workshops, offices and new reception buildings.

The yard says it proposals were helped by the support and assistance of the South West Regional Development Agency (SWRDA).

Geoff Wilkinson, SWRDA CEO, said: "This is exceptionally good news for the south west, and we have been working closely with Pendennis Shipyard to secure this important investment."

Jacqui Smith, Minister for Industry and the Regions, said:

"The marine manufacturing industry has tremendous export potential and this reinforces the government's support for the UK's superyacht sector."

The full economic impact of the investment proposals will be felt throughout the sector in the south west.

Currently Pendennis Shipyard spends some £1.8m with local suppliers and this figure is expected to rise to £3m once the development is complete.

Additional spend in the local economy will also be generated indirectly through the expanded workforce.