The owner of a Suffolk pub said its future is in “better shape than ever” after an application for holiday lets was approved in spite of fears it would spell the historic inn’s demise.

Suffolk Coastal District Council’s north area planning committee reluctantly agreed four new holiday lets to be built at the Oyster Inn, Butley, in the face of grave concerns about the pub’s future viability.

The plans will see its first-floor accommodation converted into a holiday flat with alterations made to the downstairs bar to create a separate entrance for guests. Outbuildings at the rear of the pub will also be rebuilt as three further holiday lets.

The pub’s owner, Jon Dalton of the Bloomsbury Leisure Group, said the business requires “multiple income streams to thrive” and welcomed the application’s approval as “super news”. “The future of the Oyster is now in far better shape than it has ever been,” he said.

Residents and councillors at Wednesday’s meeting, however, feared that by removing landlord accommodation, cutting car parking spaces and reducing the public bar by 10sqm, the pub, which has been closed for 18 months already, would soon be permanently lost.

Neighbouring resident Sue Sapsed said she had “huge objections” to the proposals, which would make the pub “unsustainable”.

“In three years’ time this committee will be looking at an application for the pub’s change of use and it will be disastrous for the village,” she said. “I beg you take the long-term view – we’re desperate for a pub, it’s the heart of the village.”

Butley’s parish chairman David McGinity also appealed for an opportunity to “support the pub we were promised”, after months in which it had been left “unloved”.

Committee member Michael Gower said the changes would be the pub’s “death knell” and raised wider concerns about the impact on the county’s visitor appeal. “We keep on talking about the importance of tourism . . . but I fear we are chipping away at what it is that makes Suffolk important to us,” he said.

Despite concerns, the committee could find no grounds to refuse.

“It’s with a very sad heart that I cannot find any good reason for objecting to this application,” said councillor Tony Fryatt.