The ageing terminal building – long seen as an embarrassment for the city – will be turned into an airport-style lounge.

With a modern glass facade and open-plan interior, it is also hoped to attract more cruise liners to Portsmouth.

This year, 11 liners stopped off in the city, while 21 have so far booked for 2009.

Ferry port manager Phil Gadd said: 'It's going to help in the cruise market because it's a very much bigger terminal, and we'll put facilities in there we don't already have.

'We're trying to build what these kind of customers want and have come to expect.

'The cruise ships are of great value to the city as well, because it's also the custom their visitors give to restaurants and tourist attractions.

'So it's something that's not just good for the port, it's good for Portsmouth overall.'

Built in 1976, the current pre-fab style building is the point of entry for hundreds of thousands of continental foot passengers coming to the UK each year.

But the current structure is due to reach the end of its useful life by 2010, after major repairs to its roof in 2005 were given a five-year guarantee.

The new building will feature a newsagents, shop, coffee outlet, bureau de change and an upstairs bar.

Mr Gadd added: 'It'll be pretty well what you'll get in an airport. Because people are travelling through airports all the time and see these big stainless steel and glass buildings, they expect the same when they go to a port.'

The port, owned by Portsmouth City Council, has been considering design plans for about 12 months. It will now work with architects on a final plan.

Maureen Frost, chief executive of the Portsmouth and South East Hampshire Chamber of Commerce, said it was high time for a change.

She said: 'First impressions count, and the current building doesn't say what we want about Portsmouth. It says lack of investment, and lack of pride. We want something the city can really be proud of and which will encourage people to stay in Portsmouth.'