By Alex Kirby BBC News Online environment correspondent

Otters visit the lake: Now they may stay (Image: British Waterways)

The mammals, which are gradually returning to their old haunts in many parts of Britain, regularly visit the lake.

The scheme, which will also help to improve the lake's water quality, will benefit several species.

The organisers say it will create an important new habitat in a densely populated area.

The lake is Engine Pool, one of the Earlswood lakes near the town of Solihull on the outskirts of Birmingham.

The scheme is the brainchild of British Waterways, which cares for 3,200 kilometres (2,000 miles) of inland waterways.

Its centrepiece is the construction of two artificial islands of reeds, each measuring more than 230 square metres (275 sq yards).

Mobile home

They will be moored in the middle of the lake, and will offer a home to tiny aquatic species which feed on algae.

Especially in hot weather, the algae can cause allergic reactions including itchy and irritated eyes and skin, and symptoms like hay fever.

British Waterways wanted to find a way of controlling the algae that would help wildlife without affecting anglers.

Dragonflies should benefit as well

The species which eat the algae would normally live in plants at the bottom of the lake and along its edges.

But Engine Pool is also a reservoir feeding a nearby canal, and the fluctuating water levels do not suit the plants.

Clare Guy, a British Waterways scientist, said: "Zooplankton - minute aquatic creatures such as waterfleas - need the reed roots to hide from predators like fish. Engine Pool is a popular and well-stocked carp fishery.

"The reed roots will be protected by mesh with small holes that allow zooplankton to move in and out, but prevent fish from getting in.

"The project will be monitored regularly by the Centre for Aquatic Plant Management."

Putting down roots

The reed islands are expected to attract not only zooplankton but nesting birds, dragonflies and damselflies.

The scheme also involves the provision of an otter holt and bird and bat boxes.

British Waterways says it has seen clear signs of otters using Engine Pool, and it hopes the holt will persuade them to make it their permanent home.

Otters were common and widespread in the UK in the 1950s but then began a drastic decline, caused largely by habitat loss and pollution from farm pesticides, some of which accumulated in eels, their staple prey.

By the late 1970s, they were almost extinct across most of England and in some parts of Wales and Scotland. They are now described as "widespread but sporadic" throughout the British Isles.