Manchester United's plans to redevelop their Old Trafford home have been boosted after the UK government threw its support behind the club's plans.

Chancellor Rachel Reeves announced she would be "championing" the project in a statement outlining the "bold reform" of the country's planning system issued by the Treasury on Sunday.

"The Chancellor also revealed today that she is championing a regeneration project around Old Trafford in Manchester that will see new housing, commercial and public space as a shining example of the bold pro-development model that will drive growth across the region, with authorities exploring setting up a mayoral development corporation body to redevelop the area," the statement said.

While United would be responsible for financing the stadium, the goverment's backing helps the club pursue wider development opportunities in the surrounding area.

United CEO Omar Berrarda welcomed the goverment's backing for the project.

"The delivery of a world-class stadium can be the catalyst for major regeneration of an area of Greater Manchester which requires new investment to thrive again," Berrarda said in a statement.

"We cannot achieve that wider aim on our own, which is why we welcome the announcement by the Chancellor and the ongoing support of the Mayor of Greater Manchester and Trafford Council. If we work together, there is a once-in-a-lifetime opportunity to create a landmark project around Old Trafford that the whole region can be proud of."

ESPN reported in August that United are leaning towards building a new 100,000-capacity arena rather than redeveloping the existing stadium, although a final decision has not been made. Building a new stadium on surrounding land would likely last six years and cost more than 2 billion ($2.5 billion) and is the option favoured by co-owner Sir Jim Ratcliffe and the project task force, which includes Mayor of Manchester Andy Burnham and former club captain Gary Neville.

United said the task force determined that a redeveloped stadium could increase Old Trafford's capacity to 87,000, while a new stadium could house 100,000 supporters. United said both options remain "under consideration" and the club are set to decide on the preferred option before the summer.