Medical care has been provided at Royal Hospital Haslar since 1753
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A plan has been announced to develop Royal Hospital Haslar into a new medical facility when it shuts in 2009.
The site in Gosport will be handed over to the NHS by the Ministry of Defence after 250 years as a military hospital.
Concerns have been raised that the site could be redeveloped for housing, but the new plans would instead result in a chronic care centre for the elderly.
Interested parties will meet in the coming months to discuss the project before the hospital closes in July.
Royal Hospital Haslar, the last of eight military hospitals to close following a review of services by the Conservative Government in the 1990s, has provided medical care since 1753.
Sir Peter Viggers, Conservative MP for Gosport, said: "We are saying to the MoD there are serious proposals on the table.
"We can get round the table and find a solution to Haslar which will include medical use both for the armed services and the local population."
The planned medical centre would have space for 250 patients.
Councillor Peter Edgar, spokesman for the Haslar Task Force, said: "It is very encouraging news.
"This could be a national centre of excellence for care of the elderly.
"This site is in the local plan for health and community use, we do not want to see it covered with homes."
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