Chair of Quinn's Sean Quinn has been in talks with Andrew Davies AM

The Quinn Group, which makes radiators, has announced a �133m investment to set up its European base, which will include research and development.

The plant will be expanded and in full production within three years, making four million compact radiators a year.

LG Philips Display closed in 2003 with nearly 900 job losses.

Quinn Radiators, which has plants in Belgium, Lancashire and Ireland, is currently completing a plant in Cheshire employing 400 workers.

It hopes to take on some of its workforce in Newport within 12 months and also create temporary construction jobs.

The company has been in negotiations with the assembly government and the Welsh Development Agency (WDA) for around a year.

A total of �6m in regional assistance grants have been awarded to the company, the assembly government confirmed at a press conference on Tuesday.

The LG site has had a troubled history, with the promise of 6,000 jobs announced in 1996. They never materialised.

This investment will be a major boost to the economy of south east Wales, creating a high number of quality manufacturing jobs AM Andrew Davies

The Korean electronics company's �1.2 billion sister factory making semi-conductors never went into production, while the cathode ray tube plant closed two years ago.

Grants, plant and land worth �36.65m were handed back to the assembly government.

The Quinn Group studied several options across Europe before selecting the Newport site - which it plans to expand from 700,000 sq ft to 1m sq ft.

Assembly Economic Development Minister Andrew Davies said they had been working closely with the company to secure the project for Wales.

The factory will become the European HQ for the firm

"This investment will be a major boost to the economy of south east Wales, creating a high number of quality manufacturing jobs and benefiting local companies in the supply chain, not least the steel industry in south Wales," he said.

The Quinn Group, which had sales in excess of �700m last year, also has interests in insurance, glass, plastics and hotels.

It recently bought the DeVere Belfry golf club and hotel near Birmingham.

The group employs more than 4,300 people in Ireland, UK and Europe, and has been in business for over 30 years.

Councillor Erryl Heath, Newport council's cabinet member for development and employment welcomed the announcement as "exciting news" for the city.

"Newport has developed into a fast moving, enterprising city with an excellent record in attracting jobs in the financial and business sectors however it is equally important that it also maintains a strong manufacturing base."