Swedish furniture giant Ikea is to locate a major distribution centre in Co Louth to service its planned stores in Belfast and Dublin.

The new distribution centre, which will be located in the village of Collon, will initially be used to supply materials for the construction of the Belfast store and the store in Dublin if it gets the go-ahead.

In October 2006, the company was granted planning permission, with certain concessions, for a 30,000 sq ft store in Ballymun, in Dublin. However, this approval was contested on the grounds of increased traffic congestion on the M50 and in the surrounding area.

The planning permission is now subject to an oral hearing with An Bord Pleanála.

Last December, it was granted planning permission to open a 29,000 square metre store at the Holywood Exchange retail outlet on the shores of Belfast Lough.

Following the construction of the store, the operation in Collon Business Park in Co Louth will be used as a holding and distribution centre for products for the store.

The furniture retailer has agreed terms with owners of Collon Business Park, with the lease on a 30,000 sq ft premises coming into effect at the start of May. No figure has been disclosed for the deal.

Nobody from Ikea was available to comment on the deal, but Thomas Condon, a director of Collon Business Park, described it as a major achievement for the business park and the surrounding area.

"We are very pleased and it is a great boost for us and for the village," he said.

"Our proximity to the M1 motorway had a major bearing on the decision, both for the Belfast and Dublin stores."

More than 20 people are employed in building the business park, where construction began last year. It is understood that Ikea's distribution centre could lead to the creation of up to 200 jobs.