Plans for a new £67m bus station in Leicester have been heralded as a key step in solving the city's growing transport problems.

The city council is hoping to replace St Margaret's bus depot with a larger building boasting "airport-like ambience" as part of moves to encourage more people onto public transport.

If it goes ahead, it could pave the way for the pedestrianisation of Church Gate and Belgrave Gate.

It would also leave open the possibility of creating a tram route through the city, to be routed out of the new station.

Buses that stop in Charles Street and Humberstone Gate East would be re-routed.

Three possible designs for the proposed development, which would be built in the area surrounding Mansfield Street were unveiled yesterday.

St Margaret's would be demolished or built into the plans, depending on what is chosen.

Leicester City Council's cabinet member for regeneration and transport, Coun Patrick Kitterick, said: "We need to plan now and perhaps take some bold decisions to ensure Leicester city centre can continue to thrive."

The new bus station is being planned because population predictions suggest 90,000 new homes will be needed in Leicestershire by 2026 – and extra buses would be a major part of ensuring the transport infrastructure is in place to handle the extra passenger numbers.

Latest travel figures show 17,000 people take the bus into the city centre each day, while almost 16,000 travel in by car, compared with 5,600 people who walk.

Garry Scott, Leicester City Council's transport strategy team leader, said: "At the end of the day we do not want Leicester to become one huge car park.

"We have got quite a dispersed arrangement of bus stations which is confusing for people and we have poor facilities.

"St Margaret's is the exception to that but it is too far out of the city centre. We want to entice our drivers out of their cars and therefore what we need to offer is a much more enjoyable form of transport than we have now."

Three separate models have been drawn up, all of which have what the city council have described as an "airport-like ambience" housed within a "striking, modern glass building".

Mr Scott said: "This will be the gateway through which the majority of people enter Leicester, so it is important we create a good impression for them."

The exact siting of the bus station has not been agreed, though it is expected it will be within an area bordered by Burley's Way – where St Margarets bus station is – Abbey Street, Belgrave Gate between its junction with Charles Street and the Iceland store in Short Street, Gravel Street and Church Gate.

The city council have begun consultation with land owners.

Council leaders are confident they will have the land and cash in time for work on the 50-berth bus station to begin in 2014. An application for Government funding has been made.

What businesses think...

Richard Bradshaw owner of City Centre MoTs, in Mansfield Street, and several buildings in the surrounding area, said: "Leicester needs a good bus station and it is important that it needs to be here.

"But, the issue for me is where do I relocate to? It is about being treated fairly."

Mohammed Awal runs the Afro Supermarket in Gravel Street.

He said as he did not own the land the decision was out of his hands, but said he was worried about his business.

He said: "It is going to affect everyone around here that is doing business and the problem is going to be where do we go.

"This business is my life. I have put a lot of effort into it.

"It is a great location here and that is why I chose it."

Umed Chauhan, who owns Spectrum Photos, in Belgrave Gate, questioned whether his business would last long enough to see any potential benefit from the new bus station.

He said: "I am all for bringing more people into this area of the city, provided my business is around to benefit.

"This area of town has been neglected since the Highcross development. It has become a ghost town."

What commuters think...

Helen Bauer, 30, from New Parks, said: "If it is going to help with the environment and the traffic and it is going to make it safer then I think it is a good idea.

"My husband drives into work, but I think that if the services were better and quicker then he would change to use the bus."

Olive Gyles, 69, from Rushey Mead, said: "I have always wondered why the bus station and the train station are so far apart.

"Surely it would be more logical to have the two close together. I think this will be a big, big waste of money."

Ian Reynolds, 44, from Aylestone, said: "I don't know what difference it will make.

"What we need is more buses, not a new bus station."