Portsmouth Commercial Port hopes a new terminal will improve its chances of attracting a fifth ferry operator to its facility, which serves the Channel Islands, Brittany, Normandy and Spain. It also hopes to continue an upward trend in visits from cruise ships.
The Port of Dover, the busiest ferry terminal, is also considering a big expansion but appears to be moving more slowly than before last year's crisis.
Portsmouth's new terminal will cost £16m and replace a 1976 building that had been intended as a temporary structure. The new facility should improve passenger flow, particularly in immigration checks on arriving foot passengers. Facilities for truck drivers should also improve.
Martin Putman, the port manager, said: "We need a new terminal building to support our business on the western Channel."
The existing buildings struggle to handle the demands of cruise passengers, whose luggage is currently unloaded in a temporary baggage hall. "We look to the new terminal to increase the benefits for cruise companies as well," Mr Putman said.
The port's decision to invest reflects the robustness of areas of ferry demand. According to the Passenger Shipping Association, the industry lobby group, passenger traffic to and from western Channel ports in the first 10 months of this year was up 4.5 per cent on the same period in 2008. Car traffic was down 2.6 per cent.
The cost of the new terminal will be met through borrowing. The port is entirely owned by Portsmouth city council, which will be shown detailed plans for the new terminal tomorrow.
Portsmouth competes mainly against other ports on the central Channel coast, such as Weymouth, Newhaven and Poole.
"The trend has held up quite well here," Mr Putman said. "Year on year we have increasing traffic."
The Department for Transport's ports planning policy framework, published earlier this month, singled out ferry ports as an area likely to require substantial expansion.
The Port of Dover - owned by a public trust - has been considering its expansion for several years.
It said last week: "We are currently considering a range of options to ensure that we are well placed to deliver the right capacity at the right time."
The ferry market has been difficult for several years . English Channel ferries suffered from the opening of the Channel tunnel in 1994, before being battered by the abolition of intra-European duty-free sales in 1999 and the rise of low-cost airlines.
High fuel prices subsequently pushed some fast ferry operators out of business . Operators have gradually been restoring stability by focusing more on truck traffic.
Brittany Ferries, the biggest user of Portsmouth's ferry facilities, welcomed plans for the terminal.