SHANGHAI - CHINA'S planning agency has approved plans for a Disney theme park in Shanghai, the Walt Disney Co said on Wednesday, a major step toward setting a deal for the long awaited project.

The approval by the National Development and Reform Commission will allow Shanghai, China's biggest city, and Disney to work on final details for the amusement park, to be located in the city's eastern Pudong district.

'China is one of the most dynamic, exciting and important countries in the world, and this approval marks a very significant milestone for The Walt Disney Company in mainland China,' Robert A. Iger, president and CEO of The Walt Disney Company, said in a statement.

It said the initial phase of the project would include a 'Magic Kingdom-style theme park with characteristics tailored to the Shanghai region.' Amenities will be consistent with other Disney resorts in the world, it said.

Disney has gradually expanded its presence in mainland China after opening a theme park in Hong Kong in 2005 and now has offices in Shanghai, Beijing and Guangzhou.

The park will be a major showcase for Shanghai, the mainland's main financial and commercial centre. The city is in the midst of a construction boom ahead of the World Expo, which will open on May 1. -- AP