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It is the biggest investment Britain has ever made in any of its overseas territories. Over the next three years, the Government will pay South African contractors £250 million to build and operate one of the costliest, most challenging and most remote airports anywhere in the world - on top of a mountain on the island of St Helena.

In addition, the Department for International Development is pouring in millions of pounds to help start up small businesses, build hotels and prepare this South Atlantic island, more than 1,200 miles from the African coast, for the biggest change it has known since the captive Emperor Napoleon stepped ashore in 1815 to begin six years of exile.

The airport will for the first time link one of Britain's oldest overseas possessions directly with the outside world. It is an extraordinary challenge. St Helena is only 10 miles by 6, formed of volcanic basalt cliffs rising up sheer out of the sea, with deep ravines, high peaks and precipitous slopes in the spectacular lush interior. There is almost no flat land for a runway, except one high rocky plain in the southeast known as Prosperous Bay. And here, for the past year, they have been transforming the landscape.

Every 40 seconds, day and night, a lorry tips 40 tons of rock into a dry ravine, almost 200 metres deep. Rollers swiftly level the rock, each load sprayed with 1,000 litres of water to help compression, and the floor level is raised by almost a metre every 24 hours. This will continue for the next 18 months, while half a mile away engineers will blast off the entire top of a mountain. The rock will then be left to settle, be covered in concrete and will form the safety overshoot for the long-awaited runway. The first plane is due to land in February 2016.

St Helena will probably see no more than two flights a week, linking it with South Africa and Britain, where several thousand ‘Saints' - as the 4,200 St Helenians are known - now work.

Napoleon, of course, arrived by sea. With the small entourage of generals, aides and servants who stuck by him after the Battle of Waterloo, he first saw the gloomy spectacle that has greeted every approaching ship - a rocky fortress rising up out of the deep, swirled in mist and challenging anyone to find a landing place.

For centuries there has been only one - a narrow gully, hemmed in by mountains, which leads down to the sea. This is Jamestown, the picturesque capital.

St Helena has not forgotten Napoleon. Some 2,000 British troops arrived to guard him, fortresses and batteries were built on the cliff tops and Britain annexed Ascension and Tristan da Cunha to prevent a French rescue attempt. Indeed, his exile here is virtually the only reason most people have ever heard of the tiny island. But St Helena was once the crossroads of the world. Situated at a strategic point on the long sea voyage from India, every British ship sailing round the tip of Africa was blown here by the prevailing winds. Here they put in for repairs, and passed other ships setting off for America laden with their gruesome cargo of slaves. At the start of the 19th century, three ships a day arrived at Jamestown.

Now there is only one - a British government vessel that goes back and forth between Cape Town, St Helena and Ascension, 700 miles to the north-west. The supply vessel brings not only passengers but cars, food, medicines, farm animals, clothes, pots, pans, nails, and every article essential to modern life. The Royal Mail ship, which costs the British taxpayer £5 million a year to operate, will soon be scrapped. It is also too slow for the modern world; it takes five days to reach Cape Town. For almost 60 years there has been talk of an airport. Finally Britain's last Labour government decided to go ahead. But seeing the size of the cost, it soon got cold feet and the project was put on indefinite ‘pause'.

On coming to office, the Conservatives, spurred by the enthusiasm of Andrew Mitchell, then Secretary for International Development, took a gamble: they would build the airport and throw the island an economic lifeline in order to end the subsidy - £24 million this year - needed to sustain the community.

Work began apace a year ago. Each piece of machinery has had to be brought in by ship. Before the contractors could reach the mountain top where the runway will be, they had first to fashion a jetty in Rupert's Bay. Landing bulldozers on a flatbottomed supply ship, they then had to carve out a 10-mile road on the side of the precipitous cliff.

Britain's plan is that the island should be self-sufficient when tourists arrive. The airport's £250 million price tag includes £50 million to cover its running costs for a decade. There are huge challenges. The biggest is to change the ‘them-and-us' mistrust that exists between the islanders and the small British administration.

For hundreds of years, Britain used the island simply as a fortress and naval base. But as ships stopped calling here, the economy declined. The Saints - a mixture of English personnel brought out to service the Royal Navy and freed African slaves - began to emigrate. The only local industry, making bags out of flax, stopped when Britain's Post Office started using nylon mailbags. Those left are mostly elderly. Wages are low, averaging £6,000 a year.

St Helena is one of 14 British overseas territories, former colonies too small or too poor to become independent. Many operate as tax havens, but this option is not open to remote St Helena.

To invigorate the island economy, Britain has set up Enterprise Saint Helena to offer help and incentives for small businesses. At the same time, it is pouring in money to upgrade the hospital, the island's only secondary school, the nature trails and other tourist attractions.

There is never going to be a market here for mass tourism - it is almost impossible to find a beach. But there are plenty of richer travellers who would pay to go rockclimbing or explore St Helena's steep dells with arum lilies, sleepy hamlets, the Napoleonic sites or the brightly coloured birds that exist only on the island.

To prepare for the tourists St Helena must move fast. There is an urgent need to build more hotels, upgrade roads and redevelop the Jamestown waterfront.

Many Saints are sceptical. Some have no wish to see the island change and do not believe the promise of more jobs. But most admit that without an airport, the island will die. In 20 years the population fell from 6,000 to 3,500 as the more ambitious Saints left to find work elsewhere. Some are now trickling home to take advantage of the construction boom.

Convincing the Saints to seize the first opportunity for 200 years for real growth is proving difficult. The British-led administration is reluctant to point out the harsh fact that British taxpayers see no reason to spend such large sums on so few people, and that when the present pump-priming pot of money runs out, the annual subsidy will be steadily cut back to zero.

For the moment, the place still has the dreamy feel of a lost world. There are no mobile phones, and the internet arrived only recently. There are two amateur radio stations and a new weekly newspaper to compete with the one run almost singlehandedly by a Swedish immigrant. But most news is transmitted by a friendly wave in the main street or by knots of Saints drinking South African beer in traditional pubs. It will all change. When the first plane touches down, St Helena will be utterly shaken up. The door of what was once Britain's Atlantic Alcatraz will be open. Will the Saints go marching in?

Michael Binyon is former diplomatic editor of The Times