The captured Chinese ship Xing Da will be scuttled off Bermuda and turned into a new scuba diving attraction.

Last night Government put the finishing touches to a deal with the US to keep the smuggling ship in Bermuda waters.

A key figure behind the deal was Labour and Home Affairs Minister Quinton Edness.

He told The Royal Gazette Bermuda could reap rich tourism rewards from keeping Xing Da here.

And he pointed out the US Government had promised to help cover the $60,000 cost of cleaning up the ship.

"This is a win/win situation.'' No site has yet been chosen for Xing Da 's final resting place, but Tourism Minister David Dodwell said the deal would only enhance Bermuda's already high scuba diving reputation.

"I'm really excited about this,'' said Mr. Dodwell. "We have missed an opportunity with scuba diving for years.

"The Cayman Islands attract about 150,000 scuba divers a year and we attract about 18,000. It is an opportunity to enhance our reputation,'' The Xing Da was due to be towed to Miami yesterday by the US Coast Guard cutter Reliance but a last minute call from the Bermuda Government postponed the move.

Instead frantic negotiations took place with US authorities and documents were scrutinised by the Attorney General Elliott Mottley to ensure the Government would not face future ownership snags.

"The US Government has to go through its procedures in certifying who owns the ship,'' said Mr. Dodwell.

Talks have also taken place with the Environment Ministry, Marine and Ports, the National Trust, the Bio Station, the Maritime Museum and scuba divers.

"There are enough people with enough knowledge to ensure that everything comes together,'' added Mr. Dodwell.

If the ship had been towed to Miami it would have been cleaned and sunk off the Florida reefs. The ship itself is filthy and one of the holds is full of oil.

Mr. Dodwell added: "We will clean it up. It will be done with the utmost regard to the environment.'' Mr. Edness, who was heavily involved in the operation to take the Chinese migrants off Bermuda, said the ship would be an asset to the Island.

He said Government had been assured the US authorities were prepared to pay for some of the cost to clean up the ship.

"The ship will be of enormous benefit to Bermuda, creating a reef site with the advice of the marine environment authorities and having a good public relations effect with scuba divers around the world,'' said the Minister.

Mr. Edness said the American Government had been prepared to take the ship out of Bermuda waters and on to Florida, where it would have been scuttled.

But they also made it clear they were willing to listen to any offers from Bermuda Government.

"A number of my colleagues thought it would be a good idea to look at keeping the ship here and we did that.

"We now have a deal where we take possession of the vessel, clean it up, and prepare it for the purpose of creating a reef somewhere around Bermuda.'' Mr. Edness said the US Government would indemnify Bermuda for any costs or claims over 90 days while the issue of ownership of the ship is cleared up.

"We are encouraged because diving clubs have offered to help with cleaning the ship.

"Also we have consulted with all kinds of environmental people, as well as marine environmentalists who are very supportive of what we are doing.'' DIVING SPOT? -- The Xing Da being boarded last week. -- Reuter.