The doyen of British fashion, Sir Paul Smith, is to open a shop in Italy, in an 18th century palace opposite Milan's famous Grand Hotel.

Paul, whose clothes are worn by Prime Minister Tony Blair and politician Peter Mandelson,  became only the second British fashion designer to be knighted in November last year.

The Milan shop, rumoured to be opening next month, is on via Manzoni at the Palazzo Gallaratti

It will join the stable of 264 Paul Smith shops worldwide, including those in New York, Paris, Hong Kong, London and Japan.

Sir Paul said: "The most exciting thing for me about opening a shop in Milan is how to mix what people feel is Paul Smith, with Milanese style, to create something unique.

"I don't like the idea of someone being in one of my shops and not knowing they could just as easily be in London, New York, Milan or Tokyo."

The collections will be laid out in double-height rooms and in part of a former cloistered courtyard. There will be dramatic views from upper galleries.

The range in the Milan shop will be extensive. For men, Paul Smith Mainline, PS Paul Smith and Paul Smith Jeans, a shoe department, accessories, underwear and swimwear.

For women, Paul Smith Women and for the first time, the new Pink Label,  jeans and underwear.

There will also be a department selling shoes, bags, sunglasses, jewellery and other accessories and Paul Smith Children branded clothes.

Sir Paul set up his business in 1970 in Nottingham with just £600. Today the Paul Smith empire has annual sales running into $120m.

By Deborah Bowyer