A leading peer appointed by Tony Blair is behind the bid to replace a struggling Bradford school with a new city academy, it has been revealed.

Lord Amirali Bhatia has been named as the chairman of a group which has agreed to pay £2 million for a new school to replace Rhodesway School.

The Department for Education and Skills revealed last week that it plans to replace the failing school in Allerton with a new city academy by September 2007.

The British Edu Trust Foundation has agreed to provide £2 million towards the cost of the project which is likely to include a new state-of-the-art school building.

However the announcement caused outrage in Bradford because Councillors and staff at the school did not know a decision had been made. And until today no-one at Bradford Council could provide any information on who the British Edu Trust Foundation were.

Now the DfES has told the Telegraph & Argus that the foundation is a new charitable organisation, chaired by Lord Bhatia.

It has agreed to let a feasibility study go ahead to allow detailed plans for a new city academy to be drawn up.

This work starts next week and is expected to take between six to 12 months.

Education Secretary Ruth Kelly will then decide whether to give the plan for a city academy the go-ahead and release an extra £20 million of cash.

City academies are privately sponsored state schools which are taken out of local education authority control and given freedom to develop their own ethos, curriculum and admissions policy.

Lord Bhatia is a British Muslim who became an independent peer in 2001 when he was made Baron Bhatia of Hampton.

He was born in 1932 and educated in schools in Tanzania and India.

The T&A revealed last year that Lord Bhatia had visited Rhodesway School to discuss becoming a sponsor of a city academy.

The foundation is planning to open a non-faith based city academy which will specialise in visual arts - like Rhodesway School.

A DfES statement said: "The foundation's objectives are to support national and local education initiatives through grants and sponsorship, encourage all children regardless of their background, race or religion to reach their full potential and to support the most vulnerable and help them to move from the margins to mainstream of British society."

The spokesman added that the foundation also contained a group of "like-minded leading business individuals".

A national newspaper reported last week that Lord Bhatia plans to open 20 schools as part of the Government's new city academy programme.

However Rhodesway School is the only school in the country which has been identified so far as a city academy project involving the British Edu Trust Foundation.

Lord Bhatia and Rhodesway School's executive head teacher Nigel Jepson were unavailable for comment yesterday.

Phil Green, Bradford Council's Director of Education, said: "An expression of interest was being progressed to replace Rhodesway School with an academy and we understood that ministers were likely to approve this for the next stage.

"The pre-feasibility work for the process is due to be carried out next week."