The 23-storey skyscraper, part of a £100m waterside development, is destined for the former Rank Hovis Clarence Mills site, next to Drypool Bridge on the River Hull.

The plans also features accommodation for 590 students and a 53,000 sq ft casino, underneath a plaza fronted by four restaurants, as well as a 185-bed Courtyard hotel by Marriott.

Apollo Resorts and Leisure will be applying for a "large casino" licence from Hull Council.

Developers Manor Property Group is currently awarding a contract to contractors to demolish buildings on the Great Union Street site.

Chairman Philip Akrill said he hoped the start of work would send out a positive message and "re-energise" stalled development plans for the east bank, adding: "Awarding the first of many major contracts to develop this site is a significant move for the company and for Hull. The recession has hit the development industry hard and is not over yet.

"We feel fortunate to be in a position to commence works.

"Manor Mill is one of a number of key strategic sites currently being developed by Manor in Hull; however it is by far the most ambitious."

Planning permission was granted in November 2008, despite design reservations.

The site was operated by Rank Hovis until 2005. Second World War bombing virtually destroyed the building, which dates back to 1890, and only part of the mill's original Victorian facade survives.

Other city regeneration schemes have fallen victim to the recession. The £100m "Boom" scheme, destined for the east bank, featuring flats, offices, retail facilities and restaurants was sunk by the credit crunch last year.