The area between Heuston Station and the Royal Hospital, Kilmainham, is to be transformed by a "flagship development" of apartments, new cultural facilities and office blocks up to 10 stories high.

Jointly planned by the Office of Public Works and Eircom plc, the scheme - billed as one of Dublin's most significant urban renewal projects - could have a potential value of €500 million when it is finally completed in four or five years time.

A planning application for the first phase of Westgate, as the scheme has been branded, is to be lodged with Dublin City Council today, involving a site of nearly 10 acres part-owned by both the OPW and Eircom.

Mr Tom Parlon, Minister of State in charge of the OPW, said Westgate would contribute to the City Council's "Heuston Gateway" regeneration strategy, which envisages a concentration of development around the mainline station. The first phase, designed by Anthony Reddy Associates, incorporates 1 million sq ft of offices, apartments, cultural and recreational space to the west of Military Road on a site currently occupied by a series of concrete sheds.

The second phase, which is being designed by Paul Keogh Architects, covers a site of nearly five acres east of Military Road on which there is a number of listed but quite ordinary, historic buildings associated with the Royal Hospital.

A total of 650 family-sized apartments are planned in two phases, including 130 in the social and affordable housing category, with direct access by an elevated walkway and cycle route to Heuston Station and the Phoenix Park.

Mr Parlon said the residential element of the scheme would "help in some small way to redress what has been called the 'Rochfortbridge phenomenon', where large numbers of people are forced to commute from far flung corners of Ireland". The 40,000 sq ft of cultural space being planned would complement the Irish Museum of Modern Art while some 600,000 sq ft of office space would accommodate 5,000 workers.

Asked if so much office space was viable given the currently depressed market for offices in Dublin, Mr Parlon said: "Who's to say what it will be like in five years time?" Eircom may also consider relocating its headquarters there.

Though he acknowledged that the Westgate development plan had been "on the go" long before he took office as a minister last June, he said it was a key project in the OPW programme to turn under-used State property into valuable assets.

"For too long the State was willing to sell off property and assets and let other people extract the maximum value out of the deal. Today, we are promoting a different approach - an approach that will extract the maximum value for the State".

Although the shape of the final deal on Westgate had yet to be decided, Mr Parlon said the State "will receive significantly more than what it would receive if we sold this site without planning permission and let somebody else develop it".

Dr Phil Nolan, Eircom's chief executive, said it was "no secret" that the company was rationalizing its extensive property portfolio through disposals. But this site was so significant that it had decided to become involved in the development process.

The realisation of Westgate is crucially dependent on agreement being reached with Iarnród Eireann on bridging the tracks at Heuston to provide site access. So far, according to sources, no deal on this issue has yet been made.