A group of private investors plan to erect the 175m-high wheel next to Zoo station in west Berlin by autumn 2008, and is close to signing a property deal with the city, Michael Waiser, its chief executive, told The Times.

Herr Waiser said that the London Eye was part of the inspiration for the 120 million euro (£82 million) project, which has German and international backers.

“The Zoo is an excellent location because it will give people a view of all the city’s main landmarks side by side, such as the Brandenburg Gate, the Chancellery and the Reichstag,” Herr Waiser said.

Local shopkeepers and city councillors hope that it will give an urgently needed fillip to the crumbling district, once a glittering island of capitalism and culture that symbolised the West’s defiance of communism.

“The decline of the west has got to be stopped,” Eberhard Diepgen, the former mayor of Berlin, said recently.

Klaus-Dieter Gröhler, the deputy mayor of the western district of Charlottenburg-Wilmersdorf, said: “We would greatly welcome the investment. It would be a tourism magnet for the west and would help us compete with the east, where a lot of new attractions have been created. We’ve had little in the way of new things here.”

The 15 million tourists who visit Berlin each year are drawn more to newly-refurbished landmarks and museums in the east with the Brandenburg Gate, Holocaust memorial, Potsdamer Platz square and trendy clubs and shops.

By contrast, discount stores and “For Rent” signs have been sprouting along the Kurfürstendamm boulevard, once the West’s shop window, and its two traditional comedy theatres are threatened with closure.

The street has already lost its two most famous cafés. In other districts of the west, the decline is even more visible, with closed stores, crumbling façades and uneven pavements.

The west’s opera house, the Deutsche Oper, is being eclipsed by its two eastern rivals and may face the axe after cuts in city funding. Symbolising the migration east, the bust of Nefertiti has been moved from its home in a western museum to the Island of Museums in the Spree river, currently undergoing massive refurbishment.

The biggest recent blow to the west has been the opening in May of the city’s new main train station close to the Brandenburg Gate, which means that long-distance trains no longer stop at Zoo station, once the city’s main railway hub, close to the “Kudamm”.

“Businesses around Zoo station have reported a 70 per cent fall in sales since the end of May,” said Peter-Michael Riedel, who heads a lobby group of Kurfürstendamm retailers and is organising a demonstration next week to urge the railway to make more trains stop at Zoo. “The big wheel would of course be a big attraction for the west.”

Matthias Kolbeck, spokesman for Berlin’s finance department, told The Times that the city had drawn up a contract for the sale of land to the investor group.

“The plan is solid and plausible and we regard it as a potential success,” he said. “We commissioned a survey that found that the west of the city would benefit considerably from it, with a projected 500,000 additional visitors a year who would bring 60 million euros of extra revenue.”

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