Dubai's ruler has approved a 1.6 billion US dollar island development project that would be home to what is billed as the world's biggest Ferris wheel, Belfast Telegraph said.

The project reflects a renewed appetite in Dubai for extravagance as the economy rebounds from a debt-driven slump during the past three years.

The official WAM news agency said that the Ferris wheel - dubbed the Dubai Eye - will stand 210 metres tall, exceeding the London Eye's 135 metres. Construction is set to begin this year.

Dubai has proposed a series of mega projects reminiscent of the boom years in the United Arab Emirates before the downturn hit in 2009.

The projects include theme parks and a satellite city named for Dubai's ruler, Sheik Mohammed bin Rashin Al Maktoum.