Construction work has started on the proposed £65m waterfront museum in Liverpool.

The Museum of Liverpool aims to showcase the social history and popular culture of the city, drawing on numerous unseen collections held at National Museums Liverpool.

The 8,000sq m (86,000sq ft) family visitor attraction will comprise four themes: Port City, Global City, People’s City and Creative City.

Port City will explore how Liverpool transformed itself from a small tidal inlet to a huge port. Key exhibits will include an 1838 steam locomotive that ran on the Liverpool to Manchester line and a third-class Overhead Railway carriage suspended above the gallery.

Central to Global City will be The Liverpool Story – a visual display created by Liverpool filmmakers, writers and artists, using local voices to tell the story of the city’s history.

People’s City will focus on Liverpool’s settlers, from the Stone Age to migrants and seafarers working in the ship industry. Themes will include housing and health, opportunity and deprivation, social reform, religion and trade unionism. A model of the proposed Liverpool Catholic Cathedral by architect Edwin Lutyens will also be exhibited.

Creative City will explore the city’s writers, performers, comedians and sportsmen. It will feature Beatles’ objects and the history of Merseyside football clubs.

Funding came from the Northwest Regional Development Agency (NWDA; £32.7m); a European grant from the Merseyside Objective One programme (£5m); the Heritage Lottery Fund (£11.4m) and the Garfield Weston Foundation (£1m).

Bryan Gray, chair of NWDA, said: “This is the first step in the development of an architecturally striking building that will make a spectacular addition to the Mersey Waterfront.”

Companies involved in the project include joint Danish–British contractors Pihl Galliford Try, Danish architect 3XN and exhibition planner BRC Imagination Arts.

The building is due for completion by 2008, and the exhibition by 2010. Liverpool City Council granted planning permission in 2005.