An x-ray technology manufacturing company has passed a series of landmarks in its bid to develop products which are hoped to unlock millions of pounds worth of contracts.

Durham Scientific Crystals (DSC) was given £700,000 of investment a year ago to help it develop products over the following three years.

And the Sedgefield-based business has just won a renewal of the contract with Cenamps, the One NorthEast-backed centre for excellence for nanotechnology.

It is building prototype equipment for a new method of making cadmium zinc telluride crystals. These crystals are used in the highly sensitive X-ray imaging process which will transform security, medical and industrial applications. The new process will make production cheaper and the crystals will be smaller and better quality.

DSC managing director Dr Arnab Basu said: "We are delighted to be renewing our contract with Cenamps after completing the first year of the three-year contract by successfully achieving all the milestones of development, design and construction of the hardware for producing the crystals."

The firm, which was spun out of the physics department of Durham University, employs eight people but expects to have doubled that figure over the next 12 months. Dr Basu said: "Now we can develop and refine the product and explore some exciting commercial opportunities."

Any one of the industries the technology addresses is a billion-pound global market, but the security industry is likely to be the next market.

Dr Basu said: "Because of the current climate we may well be looking into the security applications of our product first, security could be a very effective market for us.

"The type of technology we are developing can not only see through things and identify the shape of objects but can also identify specific types of material."

Cenamps chief executive Mike Pitkethly said: "The future of many scientific and technology breakthroughs lies in novel small scale technologies, and with current demand for better security systems, this is an excellent example of the way in which innovative nanotechnology is helping to address real needs within society."

The business raised £875,000 through raising investor capital in 2006 and a further £1m in 2005 from its major shareholder, US technology investor Amphion Innovations.