French authorities say it will be used as a holding centre, where illegal immigrants are taken before they are expelled from the country.

The building work started after the French and British governments agreed a timetable aimed at closing Sangatte by March of next year.

Sangatte's proximity to the Channel Tunnel entrance has been blamed for encouraging thousands of asylum seekers to try to reach Britain.

Many are prepared to risk their lives by attempting to hide on board trains heading for the tunnel.

Repeated break-ins by refugees to a nearby freight terminal at Frethun have been blamed for threatening thousands of British jobs.

Operator EWS said it had cancelled 4,000 trains since last November, losing it millions of pounds.

'Pull effect'

The presence of refugees has caused tension in France

Sangatte resident Catherine Thoraval said she was worried by "promises about the number of refugees, which is always increasing, and promises about security measures, which were not that good".

UK Home Secretary David Blunkett said he hoped Sangatte, which is run by the Red Cross, could be closed as early as the end of the year.

He said new security arrangements had also been agreed between the two countries, including joint immigration controls at Calais.

Security at the Frethun freight terminal would also be improved, Mr Blunkett said.

On Tuesday the government announced that refugees will be banned from working while their applications are processed.

Until now, refugees have been allowed to work after six months if there has been no decision on their status.

French authorities believe the concession attracts many people to Sangatte, which they see as a staging post on their way to Britain.