PLANS to transform a crumbling historic building into a new Tesco store and state-of-the-art library will not be affected by a separate £60 million development in a Gwent town, according to developers.

Residents in Risca voiced fears the much-needed restoration of the former Palace cinema would not go ahead following the announcement that a new Tesco Extra store is to be located on a former foundary site at the entrance to Risca and Pontymister.

Locals feared the supermarket giant could pull out of plans to open a smaller Tesco Express store on the ground floor of the Grade II listed Palace building, putting the development in doubt.

But a Tesco spokesman told the Argus the company still planned to be part of the project.

And Robert Davies, from developers Johnsey estates, said Tesco had signed up under the condition the new Extra store also gets the green light from planners.

He confirmed work will start on the project as soon as the massive store gets the go-ahead.

The proposed development will see the building totally transformed after lying empty for more than 20 years.

The ground floor of the Tredegar Street site will house the Tesco Express store,which is expected to create around 30 jobs.

The first floor will house a library and one-stop shop for Caerphilly Council.

Howard Powell, head of Risca Chamber of Trade, said: "The building has turned into an eyesore for the town."

"It was supposed to start this time last year, then in January, but now appears to have been shelved.

"I just don't see them building two stores."

On Monday, Risca-based The Bird Group announced plans to build more than 200 homes on the old steelworks site as well as create 500 new jobs at the Tesco.