Arsenal yesterday unveiled plans for their new stadium and announced that the old ground will be turned into an upmarket housing estate.

The new stadium at Ashburton Grove, Islington, north London, is less than 500 yards from the existing Highbury stadium and will be a four-tier complex with museum, shops, restaurant, bars and a hotel.

Meanwhile Highbury will not be entirely demolished. The ground's famous marble hall entrance will remain intact and act as the entrance for a luxury-flat complex formed from the listed east and west stands. Two new housing developments incorporating flats and mews housing, together with light industrial units, will replace the existing north and south stands, and the notoriously narrow pitch will become a landscape garden and children's playground.

Planning applications for the new stadium and redevelopment of the old one were yesterday lodged with the London Borough of Islington, the area's local authority.

The new stadium, which will cost £100 million and have a capacity of 60,000, has been designed by the architects HOK Sport, who are also behind Sydney's Olympic stadium and the new Wembley stadium.

Arsenal, who were founded in south London in 1886, hope to get the go-ahead for construction by next spring and aim to make 2004-05 their first season at the new stadium.

The club are unlikely to face opposition to developing the site as it has been derelict for almost 20 years. Islington council has already indicated that it is prepared to recommend compulsory purchase of any property necessary.

The club director Ken Friar said: "The new stadium will be a stunning addition to the area and will provide a landmark building of which everyone can be proud."

Meanwhile, Kevin Keegan came out fighting last night in a bid to defend his reputation in the wake of the recent free-for-all criticism of his reign as England coach.

The former England boss has assiduously kept his silence in the wake of his resignation from the national team after the defeat by Germany a month ago. However, Keegan has now decided to start legal proceedings against the News of the World after one of the latest in a long line of recent articles alleging that gambling was rife within an internally-split England camp. He has firmly denied the accusations.