Last year, the company announced its intention to shut down the department store, citing spiralling rents and a lack of investment in the centre.

While the company last week refused to confirm the change of plan, staff working at the Stillorgan branch were recently told that the store will now remain open.

The Arnotts decision, if confirmed, will come as a shot in the arm to retailers in the area, who have been losing business to the new Dundrum shopping centre.

Uncertainty over the future of the 40-year-old centre, with redevelopment plans by owners Treasury Holdings facing ongoing objections from local residents, has led to fears that some retailers might opt to relocate before badly needed refurbishment takes place.

Treasury is now awaiting a decision on a fourth appeal against its plans to redevelop the complex.

The current application is a scaled-down version of previous submissions and involves plans to partially demolish, refurbish and extend the shopping centre, which stands on an 8.6-acre site.

Last month, Treasury bought the nearby 2.5-acre Leisureplex site for 65m, bringing its landholding in Stillorgan to 13.5 acres. The acquisition is expected to strengthen the developer's hand in discussions with Dun Laoghaire Rathdown County Council on an overall redevelopment plan for the village.

Treasury already has planning approval for a commercial and residential development on the old Blake's restaurant site on the opposite side of the road from the Leisureplex building.

"The fact that Treasury Holdings now owns quite a sizeable area of land in Stillorgan gives us an opportunity to consider redevelopment on a large scale, rather than on a piecemeal basis, " a spokeswoman for the council's planning department says.

The council's economic, planning and architectural department has drawn up five possible redevelopment schemes for Stillorgan, which are currently on display in public buildings in the area.

At the same time, the council has commissioned feasibility and technical studies of each of the five options.

"It will be a combination of submissions and observations made by the public along with the more technical findings of the feasibility studies which will inform our final decision, " the spokeswoman said.

The planning department is under pressure from the council to have a local area plan in place by the end of the year.

While the Stillorgan District Community and Residents" Alliance . . . an umbrella group for 23 residents' associations and over 3,000 local people, has consistently objected to proposed redevelopment plans, business leaders claim a mood for change is in the air.

"The local community wants to see positive change in Stillorgan, " says Frank Murphy, president of the local Chamber of Commerce.

"For years people have battled against what they saw as uncoordinated and inappropriate development proposals. But things have changed. There's a great buzz about the place and a desire to finally get on with it . . . to get involved with Treasury Holdings and the local authority to bring about the reinvigoration of Stillorgan."

He said a draft report for the area produced in consultation with local people by a Treasury-appointed firm of London-based architects and town planners, John Thompson and Partners, elicited a positive response from most local people.

"They came over in March and held a community planning weekend at which everyone had their say. Then in May they came back and there was a big turn up of at least 120 local people to hear their proposals. There is now a possibility that instead of rebuilding the shopping centre, a new shopping complex could be constructed on the Leisureplex and the Blake's restaurant sites.

"This might actually involve redirecting the Lower Kilmacud Road so that it winds into the area where the centre is currently located. If this proposed plan takes shape, we'll have a brand new shopping centre across the road and a residential development where the old centre is."