A £10 million project to pump "green" heat into many of the city's buildings, homes and offices has taken a major step forward.

Council bosses have this week agreed to spend £300,000 to find a company to build a new combined heat and power system for central Leicester.

The successful company will build a series of environmentally-friendly plants that will produce electricity and hot water.

The electricity will be sold to the National Grid, while the water will be pumped to buildings via a network of pipes under the streets. It would be used in central heating systems and in taps.

Buildings likely to benefit from the scheme include the University of Leicester, the city's prison and council buildings such as De Montfort Hall.

Attempts will also be made to convince Leicester Tigers to sign their Welford Road ground up to the scheme.

The project is considered green because the buildings connected to the supply would no longer have to produce their own hot water for taps or heating.

It would reduce CO² emissions in the city by about 15 per cent because less fuel would need to be burned.

Councillor Robert Wann, city spokesman for the environment, said: "The company will be required to find the best way to link up homes, businesses and major organisations to this scheme.

"The contract will be put out to tender for a private company to build and run it for us and then we will provide the customers. It will give many people the opportunity to join it and benefit from green heating.

"I know this will lead to some disruption, such as roads and paths being dug up, but it will make us the greenest city in the UK."

The energy company would also take over the council's existing district heating scheme which serves 3,000 people in St Matthews, St Marks, St Peter's, St Andrew's and New Parks.

Hundreds of other homes could also be connected in the same way, but all would have meters so that people would have to pay for what they use.

The boilers will probably run on gas initially, although in the future sustainable bio-fuels such as oils or wood pellets could also be used.

It is not yet clear how big or what form the plants will take.

Ann Branson, director of the city council's housing department, said: "It's a very green scheme and we will save about 15 per cent of our carbon emissions for the city.

"Once the infrastructure is in place, organisations or homes near it would be able to join the scheme."

A citywide project is likely to be carried out in up to three phases over the next 25 years, and could include extensions into areas around Abbey Meadows, the city's new office quarter around Leicester station and De Montfort University.