The massive development in the regional capital will include a theme park, commercial district and residential area, Lhasa Vice Mayor Ma Xinming was quoted as saying by the official Xinhua news agency.

Construction on the first phase of the planned project, about two kilometres (just over a mile) from downtown Lhasa, will take three to five years, it said.

Lhasa was the scene of violent anti-Chinese government riots in 2008 and authorities have kept the city under tight security since then.

Tibetans have long chafed under China's rule over the vast Himalayan plateau, saying that Beijing has curbed religious freedoms and their culture is being eroded by an influx of Han Chinese, the country's main ethnic group.

Beijing, however, says that Tibetans enjoy religious freedom and have benefited from improved living standards brought on by China's economic expansion.

Ma said the project would create a "living museum" for Tibetan culture as well as relieving pressure on tourist attractions in Lhasa's old city and developing Tibet's tourism industry, Xinhua reported.

Buddhist pilgrims and tourists flock to Lhasa to visit the Jokhang temple in the city centre and the Potala Palace, former home of Tibet's spiritual leader the Dalai Lama.

On May 27, two Tibetans set themselves on fire in front of the Jokhang temple, the first such incident to hit the city following a string of similar acts in parts of China inhabited by the ethnic group.

Travel agents said Chinese authorities closed Tibet to foreign visitors shortly after the incident, though state media later denied any travel ban.

The tourism project will include a theme park dedicated to Princess Wencheng, a member of the Chinese royal court during the 618-907 AD Tang Dynasty who married a Tibetan ruler, Xinhua said.

Beijing has used the story to illustrate close historical ties between China and Tibet.

Other features of the development include centres for highlighting Tibetan arts and customs, the Xinhua report said.

Last year, 8.5 million tourists visited Tibet, up more than 24 percent from 2010, official figures showed.

The regional government is targeting 10 million visitors this year, producing tourism revenue of 12 billion yuan, the government has said.