The dilapidated entrance sign to the closed-down site

If it is picked after consultation, the hospital, which shut 18 months ago and is now the site for the Ty Hafan children's hospice, would house immigrants by 2003.

But Conservative local councillor Anthony Ernest has said the proposals came as a "bombshell."

"This is a small village of 3,000 people who could not cope with such a large influx of numbers," he said.

"Isolation is one thing, but these good people coming in to the country are looking for help.

"It will be very difficult for the Vale of Glamorgan council to provide these additional resources."

Dispersal plans

The government is facing a continuing challenge over where to house the growing thousands of asylum seekers reaching the country each year.

Attracted by more favourable conditions, in 2000, more than 80,000 applied for asylum in the UK.

Two asylum seekers in France trying to reach the UK

Introduced with the 1999 Asylum and Immigration Act, the dispersal scheme aims to stop the influx of applicants and relieve housing pressures in the south-east of England by scattering applicants - without choice - throughout UK regions, excluding Northern Ireland.

The Vale of Glamorgan authority would have to help immigrants find health and education services.

The disused hospital in the small, remote village of Sully - eight miles west of Cardiff on the Bristol Channel coast - has remained empty since psychiatric patients left two years ago.

It had originally opened in 1936 as a tuberculosis sanatorium and is now a grade two listed building which could became Wales' only centre for immigrants.

Home Office minister Lord Rooker has met with local MP John Smith to discuss the proposals.

He said plans were at an early stage, pending a full consultation period.

Plans criticised

But Plaid Cymru's equal opportunities spokesperson Helen Mary Jones, who sits on the Welsh Assembly's equal opportunities committee, said the proposal was wrong.

Large refugee centres cannot be sustained by small communities, she claimed, and would lead to the easy identification of asylum seekers in the locality.

And Coun Ernest added: "If you are going to put 750 people in who could be wandering around for the best part the day, obviously the potential for some clash is there.

"We have many large industries with European, US and British investment - obviously, these are considerations.

"There are far better places where one could site people.

"They need to be closer to things - for example, Cardiff Royal Infirmary, which is now empty, is close to the centre of the city, public transport and benefits offices."

The Prince of Wales officially opened the Ty Hafan facility in 2001 after a lengthy fundraising campaign.