Victoria and Albert offshoot to be built in the Tay

The world's top architects have been invited to bid to design the "V&A in Dundee" museum as its backers revealed the surprise location of the new building.

Leading architect Frank Gehry, the designer of the Guggenheim Museum in Bilbao and Dundee's Maggie's Centre, could be involved in the landmark project.

The long-awaited scheme to transform a major part of the city's waterfront took a step forward yesterday as it was revealed that the V&A at Dundee would occupy a prime site at the heart of the quayside redevelopment.

An international architectural competition is to be launched to deliver a landmark building for the new museum.

The new 47 million outpost will be built close to Discovery Point to the south of Craig Harbour on a site that will extend into the River Tay. Scheduled to open in 2014, it could attract an additional 500,000 visitors a year to the city.

A recent report claimed that, should the outpost plan become a reality, Dundee could become the Scottish equivalent of Bilbao – the Spanish city whose fortunes were transformed when the futuristic Guggenheim Museum was built there.

Mike Galloway, the director of city development for Dundee City Council, said: "We are proposing a stunning location actually out into the River Tay and we want to find a design team that can deliver a world-class building fitting for such a high-quality project. A two-stage architectural competition is about to be launched and we expect to have interest in this project from prominent architects and designers from around the world."

Mr Galloway said Gehry was likely to enter the competition.

"Frank knows about the process and I'd be very surprised if he didn't put something forward," said Mr Galloway.

Maggie's Centre in Dundee was Gehry's first commission in the UK. He was inspired by the views across the Tay, and Dundee Council has continued to seek his views for its planned waterfront regeneration.

The site is being made available through the Dundee Central Waterfront Partnership, the joint venture between Dundee Council and Scottish Enterprise revitalising the area linking the city centre with the River Tay.

The V&A at Dundee is being delivered by a partnership between the Victoria & Albert Museum, Dundee and Abertay universities, the city council and Scottish Enterprise.

Fiona Hyslop, the Scottish culture minister, said: "The V&A at Dundee will boost the city's – and Scotland's – reputation as a thriving centre for the creative industries. I look forward to seeing many innovative and high-quality designs coming forward that reflect exactly what this project is about."

Professor Pete Downes, principal of Dundee University and chairman of the V&A project steering group, said: "The next step will be the formation of a charitable company to carry the project forward and we will be making announcements very soon. There is still much work to be done to deliver this project, but I am confident we will get there – the drive and determination exists to create a major asset for Dundee and Scotland."

The V&A has been described as the world's greatest museum of art and design, with collections spanning more than 2,000 years. The aim is to stage a changing programme of exhibitions and events at the V&A at Dundee that will appeal to visitors, researchers and students of design.

Sir Mark Jones, director of the V&A, said: "The creation of the V&A at Dundee fulfils the V&A's aim of sharing its collections, exhibitions, skills and resources, reaching new audiences and giving access to more people nationally and internationally."

Instantly recognisable designs that made Gehry's name

FRANK Gehry is widely regarded as the world's greatest living architect. Now in his eighties, the Los Angeles-based architect has been responsible for the design of many of the iconic modern buildings fted across the globe.

His most famous building is the metal-clad Guggenheim Museum in Bilbao, opened in 1997, which is now one of Spain's major tourist attractions.

The museum, which is home to a permanent art collection, as well as visiting exhibits, is credited with having revived Bilbao's failing economy.

His other major designs include the "Dancing House" in Prague, built in 1996, a building on the banks of the River Vltava which resembles a pair of dancers; the sheet-metal Experience Music Project in Seattle, Washington, a museum of music history proposed by Microsoft co-founder Paul Allen; and the Walt Disney Concert Hall in Los Angeles.

He has also designed one building in Scotland – the Maggie's Centre at Ninewells Hospital in Dundee, which was opened to the public in 2003. The striking building is part of a network of Maggie's Centres in the UK, which provide help and advice for cancer sufferers and their families.

Work has also recently begun on the latest Gehry creation – a 280 million branch of the Guggenheim Museum, which is being built as part of the creation of a cultural district on Saadiyat Island off the coast of Abu Dhabi in the UAE. The museum will display a collection of modernist and contemporary art and is scheduled for completion next year.

Gehry was born in Toronto in Canada, but his family moved to Los Angeles in 1947. Gehry has even appeared as himself in The Simpsons in an episode called The Seven-Beer Snitch, where he parodied his work.