DIESEL engine maker Lister Petter is moving to Hardwicke.
After 150 years in Dursley, the firm will leave the town and take 200 jobs to the Quedgeley West Business Park next spring.
It was feared the firm could leave for Tewkesbury, but yesterday it was announced it is relocating to a new 40,000 sq ft purpose-built facility just up the A38 in Hardwicke.
It's owned by developer St Modwen, which is building homes at the former Lister site at Littlecombe in Dursley.
Stroud District Council leader Geoff Wheeler said: "Keeping Lister Petter in the district will retain 200 skilled jobs in the area, benefiting the business, its employees and the district. At the same time it would represent a major step forward in development of the plans for the 92 acre Littlecombe site (in Dursley)."
Lister Petter chief executive Bryan Draper said: "We are committing £2million to the project. Support from Stroud District Council will help us relocate to a purpose-built facility and invest in new plant and machinery. With close links to the M5 and a stone's throw from our existing warehouse at Waterwells, it's the ideal location for us. The move would allow us to retain our valued, skilled employees, create further job opportunities and continue Lister Petter's historic association with Gloucestershire."
St Modwen has submitted a planning application for the new 40,000sq ft building which will allow Lister Petter to produce engines as part of a wide range of products which include generators, marine engines, and pump and welding sets. Its products are used in various applications throughout the world including disaster recovery, agriculture, and telecommunications.
The purpose-built facility should be completed in spring 2014 and will include production, warehouse and offices.
A Dursley Town Council spokeswoman said: "We are pleased to learn that the business will be staying in the district, but obviously saddened that the business's long history in the town will be coming to an end.
"It is disappointing that the company's expansion plans could not be accommodated in the town, but we are hopeful that additional jobs can now be created on the Littlecombe site. The council will work with the district council to encourage new businesses to fill the space."