Published Tuesday, 30 October 2012
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The scheme will include repairing and removing graffiti from the City Walls, while £100,000 will be pumped into tidying the former Tillie and Henderson shirt factory site.
A number of other areas will also benefit, including the roundabout junction at Strand Road and Queen's Quay, where environmental works will take place.
Meanwhile a range of images reflecting the city's cultural past and present will be installed on large hoardings to screen some vacant sites.
Environment Minister Alex Attwood has likened the investment to what Portrush and Portstewart received in the lead-up to the Irish Open golf competition.
He continued: "Derry City will be very much in the international spotlight next year as UK City of Culture. Over half a million pounds of funding will go a long way towards ridding the city of derelict eyesores. If we want tourists to stay longer, if we want more tourists to come, then tackling major eyesores and dereliction will certainly help.
"As Minister, I released £400,000 for Portrush and Portstewart in March. This funding boost addressed decay and dereliction leading up to the Irish Open Golf competition.
"It worked well which is why I made the case to do the same in Derry ahead of its period as the UK City of Culture. Further, by working with local councils I am confident that major eyesores and dereliction within cities, towns and villages can be tackled."
Derry was recently named the fourth best city in the world to visit in 2013 by the Lonely Planet Guide - and it's hoped this new initiative will further boost its reputation.
Deputy Mayor of the City, Alderman Mary Hamilton, said: "This grant provides the opportunity to target specific eyesores that exist with a number of prominent buildings and locations in the City Centre that are either poorly presented or in need of an urgent facelift.
"The project will improve the visual character and quality of key streetscapes for the benefit of citizens and visitors as we elevate the profile of Derry during its year as City of Culture."
The sites listed for improvement include: Carlisle Circus, City Walls Circuit, Duke Street, Foyle Street, Strand Road, Queens Quay, Waterloo Place, William Street, Great James Street.