The existing shelter was hastily constructed after the accident

Ukraine has hired a French firm to build the structure to replace the crumbling concrete casing put over the reactor after the 1986 accident.

The casing project is expected to cost $1.4bn (£700m).

It will take five years to complete and the authorities say they will then be able to start dismantling the reactor.

Ukrainian President Viktor Yushchenko hailed the project:

"Today is probably the first time that we can openly look into the eyes of the national and international community and say that a solution to the problem that has long been called the Chernobyl problem was formally found," he said.

The French construction company Novarka will build a giant arch-shaped structure out of steel, 190 metres (623 feet) wide and 200m long.

It will cover the existing containment structure which stands over the reactor and radioactive fuel that caused the accident in 1986.

The reactor still contains 95% of its original nuclear material, and exposure to weather and poor construction has left the existing casing weak.

A separate deal has also been signed with the US firm Holtec to build a storage facility within the exclusion zone for nuclear waste which has been produced by Chernobyl.

The money for the schemes has come from international donors.

The fund is administered by the European Bank for Reconstruction and Development.

Its president, Jean Lemierre, said the continued commitment of Ukrainian authorities and the international community was vital for the projects to be successfully completed.