Britain's last remaining mission hospital -- where the UK's first AIDS victims were cared for and where Princess Diana famously shook hands with a patient at the height of the frenzy of fear around the illness --is to be knocked down.

The Mildmay hospital's work caring for those living with HIV will however, continue at a new purpose-built unit on the same site, according to think tank Ekklesia.

In front of national television cameras during one of several visits she made to Mildmay in 1989, Diana, Princess of Wales was presented with a bunch of flowers by 34-year-old AIDS patient Simon, before the pair joked about his red glasses and chatted.

Within 30 minutes of the story airing on the evening news, Simon's family, from whom he had long been estranged, contacted him. They stayed with him until he died at Mildmay just ten days later.

Mildmay's history goes back to 1866, when the charity was set up by the Rev William Pennefather, who trained deaconesses from his parish in Mildmay Park to go into the slums of Bethnal Green to provide care for communities devastated by cholera. The hospital has been in its current location on Hackney Road in Shoreditch since 1892.

Over the years it has served as a mission hospital responding to the health needs of the slum-dwellers of London's East End, to local cottage hospital, from an inaugural NHS (National Health Service) hospital in 1948, to Europe's first AIDS hospice.

The hospital will be demolished to make way for a new development including a new 24-bed Mildmay Hospital, which will continue to meet the needs of people living with HIV.

Mildmay's chief executive, Fi McLachlan."As time and medicine have moved on, the needs of people living with HIV in the UK have changed and Mildmay's focus has changed with it.

"Unfortunately, the hospital in its current state could not meet these needs and the expense of running and maintaining such an old and huge building was drawing funds away from the patients."