The £1-million demolition of Rolls-Royce's East Works site in Patchway will start next month, despite the sale of the land falling through.

The former factory site will be flattened in a six-month demolition programme before being re-offered for sale next year.

Work will start by demolition contractor Buckingham in June and will be finished by December, at a cost of about £1m.

Developer ProLogis originally offered £40m for the 65-acre site after it got planning permission to transform the land into offices, a hotel and an industrial estate, which it said would create 2,000 jobs.

ProLogis paid Rolls-Royce a cash deposit for the site, promising to pay the balance on receipt of full planning permission.

But the credit crunch saw ProLogis last month reach "an amicable settlement" to walk away from the deal leaving Rolls with a £40m hole in its finances.

The East Works has been replaced by a £75m factory across the road, which was opened by Princess Anne last October.

The move, which took place over four months, involved transferring more than 750 staff and 800 pieces of equipment from East Works to the new site.

The East Works has made engines for a range of aircraft including Concorde, the Harrier jump jet and the Brabazon.

The newly built Patchway site is the Defence Aerospace base for Rolls and houses assembly lines for a range of aircraft engines, including the EJ200 for the Typhoon, the Adour for the Hawk and the RTM322 for the NH90 and EH101 helicopters.

Rolls, which has 3,500 staff at Patchway, insisted the collapse of the East Works sale has not affected its day-to-day operations or the future of its new factory.

A Rolls-Royce spokesman said: "The contractor has started preparations for the demolition of the East Works site which will commence within the next couple of weeks.

"The project will take around six months to complete."

The news comes after a spate of activity for the company.

Last week, Rolls struck a £75m deal with the Malaysian Air Force. The firm won a five-year contract to service the Adour engines that power the Hawk fleet of aircraft. It is also awaiting confirmation of the deal to build engines for a third series of Eurofighter jets, which will be worth £750m for the firm.