A huge new ferry service is to come to Portsmouth to take on P&O after a major deal was struck with a Spanish firm.
Acciona Trasmediterranea has signed a contract with city council chiefs to run a route from Portsmouth to Bilbao from the ferry port.
The service will be in direct competition with the existing P & O service to the Spanish port.
Acciona's combined freight and passenger ferry, called Fortuny, will take 1,000 passengers compared to 2,500 on the P & O vesssel, but is a more modern ship.
The service will run from May 16 - going across twice a week off-peak and three times a week during the high season.
P&O Ferries is locked into the Bilbao route until 2008, but after that it will have to decide whether to continue.
P & O, which has been taken over by DP World, insisted it welcomed the competition and believed the introduction of another operator would allow the market to grow.