Marble Arch is to be turned into a "beauty spot" with fountains and lights.

The Westminster council unveiled plans for a £1.5mn renovation of the arch, which was built in 1828 as a gateway to Buckingham Palace but is now surrounded by traffic.

The three bronze fountains beside the landmark have been out of commission for 10 years but will be repaired.

A coloured lighting system will be installed to highlight the arch and the soaring needle jets of water.

The project also includes planting, restoration of the west lawn beside Marble Arch, improvements to the east lawn and new benches for tourists and shoppers.

Transport for London (TfL) is replacing all but one of the subways that criss-cross beneath the area with pedestrian crossings. Colin Barrow, leader of Westminster council, said he was horrified the arch was in such poor condition.

"A year ago what you had there were some condemned subways, some fountains that didn't work, and there was a certain amount of graffiti about. This is an iconic space. It would not have been allowed to happen in Paris.

"This is going to create an area that people will actually be able to stop in, rather than somewhere you just walked beneath," said Barrow.

Upgrading the traffic islands has been a priority for politicians for decades, and a series of schemes have been put forward to regenerate the junction of Oxford Street, Park Lane and Edgware Road.

Two years ago TfL confirmed it was considering moving the arch to Hyde Park and in 2004 architects John McAslan and Partners drew up a £40mn plan to upgrade it.

The proposal, linked to the now-defunct plan to run trams on Oxford Street, advocated pedestrianising part of the junction, turning the roundabout into a tram terminus, and knocking down Sixties blocks on its north side.