AN island will be created in Victoria Harbour as part of a $2.4 billion extension to Hong Kong's Convention and Exhibition Centre. The site, which will form part of the Central and Wan Chai reclamation project, has been under consideration for about six months. A study has concluded that it is feasible and would not cause any major environmental problems. It is hoped the extension will enable Hong Kong to bid for major expositions well into the next century. The island will be linked to the main centre by a series of footbridges. Double-decked crossings are proposed to provide road and service links. The only hitch with the development could be a dust problem for the two hotels adjacent to the existing Convention Centre. Both have views on to the extension site. A report by the Environmental Improvement Committee of the Wan Chai District Board, to be delivered to the board today, said the Grand Hyatt and New World Harbour View hotels could fall victim to ''adverse impacts'' of the proposed extension. It also named the nearby Great Eagle Centre and Harbour Centre as ''sensitive receivers'' which had a direct line of sight to the Wan Chai reclamation project. A standard double room with a harbour view at the luxury Grand Hyatt hotel costs $2,500 a night. The report said it was thought the main construction work would begin in the middle of next year and would be finished in late 1996. Representatives of the Grand Hyatt and the New World Harbour View were not available for comment yesterday. The announcement of an extension was made in March by Financial Secretary Hamish Macleod. The massive Central and Wan Chai reclamation project began earlier this year. A major part of the project will be the reclamation of land in Central for the new airport railway. It will also add 20 hectares of land for the development of commercial buildings, road transport infrastructure and new piers for ferry services to Discovery Bay and the outlying islands.