A major development at a disused paper mill in Sheffield will not have to include cheap housing, after the firm behind it struck a deal with the council.
Outline planning permission for up to 320 homes on the former Oughtibridge Mill site was granted in October last year.
But Commercial Estates Group has since been locked in a dispute with Sheffield Council over a demand it include 10 per cent 'affordable housing'.
The developer argued the cost of the project meant this was not viable, but council planning chiefs disagreed and an application to remove the requirement was rejected earlier this year.
The firm appealed against the decision, arguing that an incentive known as 'vacant building credit' should apply, since it was replacing an empty building with a new one.
However, the council claimed this did not apply to abandoned buildings, and if it did, it would make it almost impossible to bridge the annual shortfall of 725 affordable homes being built in the city.
A study commissioned by the developer found it could only afford to provide £850,000 for affordable housing elsewhere in the city, but the council's own assessment suggested it would be possible to make 10 per cent of new homes on the site affordable or to pay £2.8 million towards cheaper housing off-site.
The company agreed to up its offer to £1.75m for affordable housing off-site, which planning officers accepted as a 'reasonable compromise' that, coupled with other sources of funding, would enable around 35 new low-cost houses to be built.
Although the council stuck by its valuation, officers concluded that turning down this offer was too risky as it could end up with nothing should the developer succeed with its appeal.
Councillors agreed at Tuesday's planning committee meeting to lift the affordable housing requirement and accept the developer's offer, on the grounds that work will not begin until the firm has both withdrawn its appeal and signed a legal agreement to pay the £1.75m on top of previously agreed contributions towards education and transport improvements in the city.
The agreement was reached despite objections from Bradfield Parish Council, Loxley Valley Protection Society and the Campaign for the Protection of Rural England to lifting the affordable housing requirement.
Penistone and Stocksbridge MP Angela Smith had also objected, saying: "The original application was and remains highly controversial within the community and risks considerable additional burden upon already-strained local infrastructure and services.
"The very least that the applicant can do is to fulfil the community obligations to which it has previously agreed."