Sheffield's Labour-run council has condemned what it called a 'dangerous and reckless' ruling which could pave the way for fracking just beyond the city boundary.
The Planning Inspectorate today approved plans by Ineos to carry out test drilling on land off Bramley Moor Lane, Marsh Lane, near Eckington.
Should the tests prove successful, the chemicals giant could apply for permission to begin fracking at the Derbyshire site to release shale gas.
Sheffield Council, which opposes shale gas extraction, had formally objected to the application.
Councillor Jack Scott, cabinet member for transport and development, said: "I am furious and dismayed at this decision. Let’s be clear here - fracking is dirty, dangerous and reckless and should not be happening in North East Derbyshire, Sheffield or anywhere else.
"It risks causing earthquakes, polluting our water and damaging our area’s beautiful countryside. I have asked our planning team to undertake an urgent assessment of the risks that will arise for Sheffield from today’s dangerous decision."
Mr Scott added that even if fracking could be done safely, which he claimed it couldn't, the shale gas being extracted would still be a 'grubby fossil fuel'.
He claimed what was needed instead was a 'revolution' in the generation of renewable energy and a move to a more sustainable way of living.
Ineos had appealed to the Planning Inspectorate, arguing that Derbyshire County Council was taking too long to make a decision - an accusation the authority denied.
Ineos spokesman Joseph Wade said: "It is disappointing that a planning inquiry was needed for what is a straightforward project – leading to an unjustifiable waste of public money.
"The permission allows for the drilling of a single vertical core well to gain scientific knowledge of what is below the surface – as has been agreed by many councils many times in the past to support the coal industry in the region.
"Ineos Shale hopes that this case will set a precedent for timely decisions on future applications based upon the facts. A fully-fledged shale industry can be a huge boost to the UK, providing jobs, investment and secure energy.”
Friends of the Earth campaigner Richard Dyer said: "This is a bitter disappointment for the local community who have worked so hard to fight this threat, and also Derbyshire County Council who opposed it, but at least local people have had a say.
"The Government’s current outrageous proposals to fast track future shale gas test drills through ‘permitted development’ rules will ride roughshod over local democracy and mean communities will be shut out of participating in decisions like this."
Fracking is where a mixture of water and chemicals is blasted deep into the ground to release shale gas.
Critics claim it will damage the environment but Ineos has said it could help meet the UK's energy demands.