Developers have been given the go-ahead to remove holiday homes from a multi-million pound riverside regeneration project.

Whisstocks Developments Ltd won approval last year for 14 holiday homes at Woodbridge as part of a scheme including boat building facilities, retail space, a restaurant and heritage attractions. Approval was also given for housing at nearby Nunn’s Mill.

But the company later asked Suffolk Coastal planning chiefs to remove the holiday home requirement and instead allow permanent housing for open market sale. They said the scheme would otherwise be rendered unviable by escalating costs.

This week, district planners gave their backing for restrictions on occupancy to be lifted - a decision welcomed as “great news” by developers, who say the scheme is now ready to move into its next stage.

Julian Wells, a director at FW Properties, the agent for the site owner, said: “A lot of things have arisen that meant a change in condition was very much needed. By being granted permission to make that change, we believe the scheme is now viable and deliverable. Now we can sit down with the bank and map out the plan for going forward.”

Developers argued that selling the homes would facilitate architect Paul Weston’s revised floodgate - required by the Environment Agency following December’s tidal surge - as well as help cover additional fees for surface water drainage and decontamination works, and overcome VAT costs arising from the potential development of new-build holiday homes.

Planners had to consider the concerns of Woodbridge Society about the issue of VAT being raised so late in the negotiation process and that it could compromise the council’s long standing policy of resisting new homes on the river, and from the River Deben Association, which although supportive of the boatyard redevelopment, expressed concern that the changes may have a bearing on future riverside applications.

Mr Wells said the large majority of people wanted to see the scheme go ahead and argued that residential accommodation would enable a “proper community” to grow in the area.

It is thought that work may start by the end of the year, with completion set for early 2016.