NEWPORT, R.I. - Hundreds of prime acres are up for grabs in this waterfront city and its neighboring towns, valuable commodity on an island known for prized beaches, lavish homes and natural beauty.

The 260 acres on Aquidneck Island were for decades owned by the U.S. Navy, which says it no longer needs the land and is moving to unload it. The island communities envision the property as untapped economic potential for sweeping new development.

But another suitor - the Narragansett Indian Tribe - says the land falls under its ancestral footprint and is mounting a bid that may conflict with local development plans.

The Narragansett, Rhode Island's only federally recognized American Indian tribe, say getting the land would allow it to expand far beyond its existing reservation and would create room for a hotel complex, shopping, a cultural center, park space and public housing.

The tribe and its supporters see an unprecedented opportunity for a population that's grappled with poverty and whose past efforts at development, including a tax-free smoke shop and proposed casino, have been rejected by the state.

"The tribe's current land has been extremely limited. This would help boost the tribe's ability to success," said John Brown, the tribe's historic preservation officer. "We shouldn't have a chance for economic self-sufficiency?"

The tribe's bid has rankled some local officials, who say it was submitted after they had done years or work and planning in anticipation of using the land.

"It's delaying the process, and I don't think it's benefiting the city of Newport," said Paige Bronk, Newport's director of planning, zoning, development and inspections. "Their involvement, I would consider to be detrimental to our efforts."

Federal agencies receive right of first refusal for surplus military land, so the Narragansett enlisted the help of the Bureau of Indian Affairs, which has asked to acquire it on the tribe's behalf. .

The bureau has asked to obtain the property for free and to waive a requirement that whoever gets the land pay for its environmental cleanup. The Navy has determined that asbestos, lead-based paint and other contaminants taint at least some of the property. Navy officials say they're in the process of responding to the bureau's request.

The Defense Department has multiple options for disposing of surplus land, including conveying it for public benefit or selling it at fair-market value. The land has been advertised as surplus in the Federal Register, a key step toward making it available to nonfederal agencies like local governments and redevelopment authorities or ultimately private interests.

The availability of the land offers a chance to level the playing field, said the tribe's lawyer, Douglas Luckerman.

"This is a real opportunity for them to move ahead with economic development on solid footing - not gaming, not cigarette taxes," Luckerman said.

The Narragansett identify themselves as Rhode Island's aboriginal residents, greeting white explorers in the 16th century and offering land rights to Roger Williams, the colony's founder.

Federally recognized in 1983, the 2,600-member tribe occupies a reservation in the southern Rhode Island town of Charlestown that is well removed from the state's commercial hub.