A Margaret Thatcher statue rejected for Parliament Square could be erected in her home town.

Officials in Lincolnshire are developing proposals which could secure a place for the bronze sculpture of the UK's first female prime minister.

The Public Memorials Appeal has offered the 10.5-foot (3.2-metre) statue to Grantham after failing to secure permission for it to be erected in Parliament Square looking towards the Palace of Westminster.

Mrs Thatcher's divisive legacy had prompted police fears of potential vandalism and civil disorder if it was placed in the capital near Parliament.

Westminster City Council advised in January this year that a "more appropriate design and evidence of support from the Thatcher family may be considered more favourably", amid reports Mrs Thatcher's daughter Carol was unhappy with its lack of a trademark handbag.

Grantham Community Heritage Association (GCHA), which runs the Grantham Museum, and South Kesteven District Council (SKDC) are working with the Public Memorials Appeal to draft outline terms of an agreement.

Formal proposals are expected to be submitted to the council before the end of the year, allowing councillors to consider the application.

The statue, by Douglas Jennings, was funded by private cash and reported to cost £300,000.