``This project has great potential for Hilton International and we believe this joint statement underlines our ambition to expand in Russia,'' said Ladbroke chief executive Peter George in a statement.

Moscow's populist mayor Yuri Luzhkov came to London from the Labour Party's annual conference in Blackpool on Tuesday, to sign a protocol with Ladbroke allowing the project to go ahead.

Ladbroke will manage the hotel on behalf of a joint venture company. The group, which owns the Hilton hotel brand outside the United States, will also invest up to $5 million in the $50 million project.

The remaining $45 million will come from Russian business, financial institutions and an international development funding agency.The financing has yet to be signed by all parties and until then Ladbroke declined to reveal their identity.

Building work on the site, at the junction of Nikitskay Boulevard and Arbatskaya Place, will start by the end of this year and take two years to complete.

The 305-room Moscow Hilton will include a conference room for 400 delegates as well as fitness clubs, a swimming pool and roof top executive lounge.

The building will be constructed using traditional Russian design features. A prime feature of the design is a central palm court set below a glass dome at first floor level.

Ladbroke owns the Hilton hotel brand outside the United States where it is owned by Hilton Hotels Corp. There are a total 420 Hilton hotel's worldwide mainly in gateway cities.