West Herts hospital bosses have formally backed plans to bid for £350 million in NHS funding that would bring major investment to Watford General, while retaining services at St Albans City and Hemel Hempstead.

The decision was taken at a meeting of the West Herts Hospitals Trust (WHHT) yesterday, and backed by a meeting of the Herts Valleys Clinical Commissioning Group (HVCCG) later the same day.

As part of the bid, the first stage of which will be submitted by the end of the month, up to £300 million would be earmarked for Watford General.

This would be spent on two new clinical buildings on the Vicarage Road site, including a new theatre suite, a new women's and children's unit and a new ward block. The existing Princess Michael of Kent building would be refurbished, with a new purpose-built car park, and a portion of land at the site would be sold off for housing.

Meanwhile, St Albans City Hospital would be refurbished to become an enhanced surgical facility for planned surgery and cancer care, with two new operating theatres and enhanced diagnostic services.

At Hemel Hempstead the Verulam building would be refurbished to offer medical services, the urgent care centre would move to a different building and land for up to 250 homes would be sold off for development.

At the meeting, campaigners argued that a new, central A&E hospital would be a better option for west Herts, but this was ruled out earlier this year as the estimated cost was in excess of £600 million.

Peter Ingram, chair of the Herts Valley Hospital campaign, announced they would try to raise the additional funds needed themselves.

He said: "We are aware of the size of the funding gap to be bridged and acknowledge that this is a huge challenge. That challenge is accepted.

"Within the next six to nine months, we will provide you with a viable better choice - a centrally located hospital supported by local facilities.

"We will do this by harnessing the latent enterprise, skills, passions and philanthropy of the west Herts community."

Mr Ingram said the group had already identified two potential sites for a new hospital, and would now commission a feasibility study to look into how best to raise the funds.

Members of the New Hospital Campaign (NHC) described the trust and the CCG's decision as "entirely predictable".

Edie Glatter, of the NHC steering group, said: "We will continue to pursue the matter to ensure that West Herts gets hospital provision suitable for the 21st century.

"We will examine all the avenues open to us. It is shocking and completely against the public interest that this wasteful, backward-looking and risky option is consuming time and money that would be far better spent on taking a new direction."

At the meeting, WHHT deputy chief executive Helen Brown said the decision to spend the bulk of the money on Watford, known as option one, reflected the volume and complex needs of patients who were treated there.

Watford General has 800 of the trust's 920 beds, a busy A&E and around 100,000 emergency admissions a year. Ms Brown also cited the "significant estate challenges" at the site, where 80 per cent of the buildings are assessed to be 'poor' or worse.

She said: "We know the environment is not what it should be. There are issues at Hemel Hempstead and St Albans, but not to the same extent."

Chief executive Christine Allen said: "While I understand the desire for a new hospital, given the funding constraints my view is that we cannot wait any longer. We have to get on and make some changes.

"This is not necessarily the perfect solution, but it's essential we grasp this opportunity and therefore my support goes to 'option one'. It gives us the best chance for funding and enhancing services."

St Albans Labour Party welcomed the decision as a successful result of their campaign to retain local services, describing the "desperate need" to improve buildings on all three hospital sites.

Labour Group leader Cllr Malachy Pakenham said: "After many years of seeing services eroded at our city hospital, including the loss of step-down wards recently, it's good news that the hospital trust is recognising its vital importance to our district, and is preparing to invest significantly in an upgrade."