The Spanish city of Valencia has reached an agreement to host a grand prix on a street circuit around the new America's Cup port from 2008, Formula One supremo Bernie Ecclestone announced on Thursday.

Ecclestone said however that the seven-year agreement with the Valencia regional government was conditional on the present president Francisco Camps of the centre-right Partido Popular winning local elections to be held later this month.

The race, to be called the European Grand Prix, is scheduled for late in the season on a newly designed circuit of between 4.1 and 4.3 km in length reminiscent of Monaco's with its harbour-side location.

Spanish media said that Ecclestone had insisted the race must be on a street circuit rather than the nearby Ricardo Tormo track in Cheste which hosts a round of the MotoGP world championship and is also used for Formula One testing.

The inclusion of the Valencia race would give Spain two grands prix next year, an announcement at odds with Ecclestone's previous opinion that no European country should have more than one race.

Imola, the Italian circuit that hosted the San Marino Grand Prix, was axed from the calendar this year while the Nuerburgring and Hockenheim are now alternating as hosts of the German Grand Prix.

The European Grand Prix has been held at the Nuerburgring since 1999 as Germany's second race. Brands Hatch and Donington Park in Britain and Jerez in Spain have also hosted races with that name.

Valencia's willingness to pay an estimated 26 million euros ($35.20 million) to stage each race, and the boom in popularity of Formula One in Spain since the emergence of double world champion Fernando Alonso, are seen as major factors behind the decision.

Barcelona's Circuit de Catalunya, where the Spanish Grand Prix will be held this Sunday, has an agreement to stage that race until 2011.