London's empty Millennium Dome is to be handed over to developers to be transformed into a 20,000-seat music and sports venue.

Instead of a fee, the government will be given a share of the profits, which it claims could add up to �550m over the next 20 years.

Ministers say the scheme will create a "mini city" with 7,000 new homes and 20,000 jobs.

But the Conservatives said the deal was "disgraceful" and branded Lord Falconer, who brokered it, "a complete failure as an estate agent".

Further cost?

Lord Falconer insisted the deal was "excellent value for money".

The Dome is being taken over by the Meridian consortium, which includes US entertainment giant AEG, who plan to stage shows by stars like Madonna and U2.

Lord Falconer: Deal is "excellent value for money"

The new stadium will also be able to stage sports as diverse as ice hockey, basketball, boxing and figure skating.

But the venue is unlikely to open for another five years.

In the meantime, it will be maintained by government agency English Partnerships at a cost of �250,000 a month.

Former Millennium Dome supremo P-Y Gerbeau, who had put forward an alternative plan for the site, said he would like to see an inquiry to see if the deal "offers value for money".

"They have 190 acres of prime development land which they have given away."

He added it was a "very sad day for the Dome".

The AEG deal, which still depends on planning permission, will also see 170 acres of development around the Dome.

New mini city

Lord Falconer said the taxpayer would get no money "up-front" for the Dome and what is to become the Dome Waterfront leisure area.

But the investors were agreeing to put in slightly more than �200m.

Once the consortium reached a certain level of return, the government would get a share of the profits, he said.

The Dome will stand as a decaying monument to New Labour

Lord Astor Tory spokesman

Over the next 20 years, it could receive up to �550m, said Lord Falconer, who is leaving his job as Dome Minister to join the Home Office in the government reshuffle.

Doubts on delivery

The "proven record" of those taking over the site was a key reassurance that the plans could be delivered, Lord Falconer said.

But Conservative spokesman Lord Astor said the government's handling of the Dome was "disastrous".

And he demanded to know how much the project would finally cost the taxpayer.

Madonna could be one of the stars performing at the new-look Dome

The government had said the attraction would need no more public funding many times - only for those hopes to be dashed, he said.

"The Dome will stand as a decaying monument to New Labour," Lord Astor added.

Liberal Democrat spokesman Tom Brake told BBC News that Lord Falconer had "done the best of a bad job".

But he described the government's forecasts for its profits share as "wildly optimistic".

Gas deal

Other critics of the deal say it could mean the government has to wait up to 25 years for its share of the proceeds.

But claims that government would be forced to spend �200m on a new bridge linking Greenwich with Silvertown north of the River Thames were unfounded, Lord Falconer said.

Present Dome owners, English Partnerships, bought the site from the former British Gas with the understanding that British Gas would get 7.5% of the proceeds from any re-sale.

Lord Falconer said no talks about how that agreement would now be interpreted had yet been held with British Gas.

Sale inquiry

The National Audit Office, which has already held two inquiries into the Dome in recent years, will now investigate the sale.

The Dome received an initial �449m from National Lottery funds, but then the New Millennium Experience Company had to ask for a further �179m to keep going.

Last week, the government admitted about �4m of public funds had been spent looking after the Dome since it closed at the end of December 2000.