NATO Secretary General Jaap de Hoop Scheffer and Belgian Prime Minister Guy Verhofstadt signed a memorandum of understanding Wednesday paving the way for the alliance's transfer to the new building.

The memorandum foresees building work to start in 2008 for completion in 2012, three years later than the 2009 target announced by NATO last year when it first announced plans to move.

"This is a major project and we've taken account of the fact that we'll need more time," one source at NATO told AFP.

The new headquarters will be an ultra-modern wave-like structure to replace the unloved barrack-style offices built out of prefabricated concrete in 1967.

The futuristic complex will be built on a 40-hectare (100-acre) belonging to the Belgian defense ministry, just across the road from the current headquarters in the Brussels suburbs.

The United States is to pay slightly more than 22 percent of the cost.

NATO, which was set up in 1949, is still housed in prefabricated buildings thrown up quickly after the transfer of its Paris headquarters to Brussels in 1967 when France withdrew from the organization's integrated military command.

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