Shops in the town centre could benefit from the grant

The money is part of an Objective One grant which will go towards a �4m project to improve the town centre of Holyhead, Anglesey.

Part of the scheme will focus on developing the Victoria Road area.

Another proposal could see shop owners given small grants to improve their stores in a street enhancement project.

A regeneration manager will also be appointed, who will aim to attract new development and businesses to Holyhead, as well as work with existing firms to make sure they take full advantage of the scheme.

The announcement is another important step forward in our long term goal of regenerating the town W J Williams, Anglesey council leader

The centre of Holyhead has faced problems with anti-social behaviour in recent years.

In 2004, North Wales Police introduced their first overnight curfew zone in the town.

In 2005, an alcohol-free zone was brought in after continued complaints about drunken behaviour.

The �2.5m funds from Europe will be announced by Economic Development Minister Andrew Davies on Thursday.

The rest of the �4m cost of the scheme will come from the Welsh Assembly Government, the Welsh Development Agency and Anglesey Council.

Mr Davies said: "I am delighted to be announcing the approval of funding for this important project, which will reposition the town as a thriving and vibrant place to visit and live," he said.

The centre of Holyhead has faced problems in recent years

"In addition to creating the right conditions for increased private sector investment, boosting the economy of the town, the project will focus on rejuvenating areas of the town to encourage ferry users to spend more time in the town itself."

Councillor W J Williams, the leader of Anglesey council, said it was a huge boost for the town centre and its future.

"European funding, together with the valued support of our many partners, is playing a crucial role in Holyhead's regeneration," he said.

"The announcement is another important step forward in our long term goal of regenerating the town, and creating prosperity and a better future for its people."

Holyhead recently welcomed hundreds of American and Canadian tourists with the visit of the town's first cruise ship.