More than 350 jobs will be created in Waterford as part of a major expansion of AOL Europe's Irish operation, it was announced yesterday.

Business leaders in the city welcomed the development as further evidence that the south-east, dependent in the past on more traditional industries, is a suitable base for high-technology providers of international services.

In total, the company is providing 500 extra jobs at its two Irish centres - Waterford and the East Point Business Park in Dublin - over the next five years. The Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, said at least 75 per cent of the jobs would be at the Waterford facility, where AOL Europe began operations just over a year ago and now employs 150.

The company is a joint venture between Bertelsmann of Germany, described as the third largest media company in the world, and Virginia, US-based America Online which is the world's leading Internet online service.

As well as giving the south-east its first major call centre, the development makes it easier for IDA Ireland to bring a better balance of industries to the region. "We have done quite well from a manufacturing point of view but we have been focusing on the need to attract more companies in the international services sector," said the agency's regional manager, Mr Pat Loftus.

Getting such companies established in the first place was the most difficult part; others should now prove easier to attract. A breakthrough was achieved in September last year when AOL Europe and the Canadian company Sun Life Assurance, which set up a software development centre, both decided to set up in the city.

Allied Signal is also creating extra high-tech jobs with an expansion of its aerospace airfoil facility in the city.

Mr Frank O'Donoghue, chief executive of Waterford Chamber of Commerce, said the latest announcement was further evidence that companies seeking "quality, skilled people can get them here in Waterford".

"It's the kind of development that we want here in Waterford and the fact that they're expanding after only a year is a great tribute to the workforce. It's great news," he said.

Ms Harney agreed, describing the expansion as a "major endorsement" of the existing AOL Europe facility in Waterford. "It also illustrates the ability of the city and surrounding area to support an international call centre operation, in terms of providing the number of quality skilled people required as well as the necessary infrastructure."

In response to local criticism that the IDA was not doing enough to attract jobs to the region, the Tanaiste had indicated recently that a major jobs announcement for the city was in the pipeline.

Between its Dublin and Waterford operations, the 500-job package will double the number employed by AOL Europe in Ireland. The company's managing director in Ireland, Mr Richard Sheridan, said there was plenty of scope for further expansion as the European Internet market grew.