Shell Centre development approved by Eric Pickles

Plans by developers Braeburn Estates – a joint venture between Canary Wharf Group and Qatari Diar – to demolish most of the oil company's office complex apart from the main tower and build new offices, shops and nearly 900 homes on the site were approved by Lambeth councillors in May 2013.

In September the case was 'called in' by the Department for Communities and Local Government due to concerns about the impact of the redevelopment on the setting of the Westminster world heritage site.

A public inquiry was held during November and December under planning inspector John Braithwaite.

At the inquiry, Westminster City Council, English Heritage and a local residents' group argued against the scheme.

The inspector's report was then submitted to Mr Pickles for a final verdict which was announced on Friday.

"Having considered the criteria and other relevant matters, ministers agree with the independent planning inspector that planning permission should be granted for development of the Shell Centre at South Bank," said a spokesman for the Department for Communities and Local Government.

"They agree that the proposals will deliver high quality design, provide accessible jobs and homes, and enhance the character of the South Bank area. The scheme is also supported by both the local council and Mayor."

The developers say that work on the scheme will begin in late summer this year.

Sir George Iacobescu, chairman ofCanary Wharf Group, said: "We are delighted that the secretary of state has approved these plans.

"The project will deliver many significant local benefits with new jobs and employment programmes, hundreds of new homes including much needed affordable housing, together with new open spaces and a park.

"We feel privileged to have this opportunity to play a role in regenerating this popular but somewhat neglected area of London. We will continue to work closely with local stakeholders to ensure our move into the construction phase is as considerate as possible to the local community."

Qatari Diar Group's chief executive officer, Khaled Al Sayed, continued: "Our priority is to get this construction project moving, so that businesses, residents and visitors to the local area start to reap the benefits of this fantastic scheme as soon as possible."

Director of the redevelopment for Shell, Richard Montgomery, said: "The South Bank has been Shell's home in London for more than 50 years. This redevelopment will enable us to continue to make a positive contribution to the South Bank and wider Waterloo area's regeneration. It will also see Shell's London staff all based in one location for the first time in many years."

The secretary of state's decision has also been welcomed by Lambeth Council.

"We're delighted to retain Shell as one of Britain's largest and most important employers to act as a catalyst for more jobs, homes and economic activity in Waterloo," said Cllr Lib Peck, leader of Lambeth Council.

"The scheme is bold and ambitious, as we are for Lambeth and provides a wide range of planning benefits including substantial funding for community facilities, streets and spaces surrounding the site and provision to secure local jobs and training opportunities.

"During the very serious deliberations of Lambeth Council's planning process, considerable regard was given to the impact the development would have in terms of the relevant conservation areas.

"Our decision to support the Shell Centre scheme is entirely consistent with the aims of the National Planning Policy Framework which means we have a planning system where stakeholders work together to ensure sustainable economic growth.

"Indeed, the scheme is the product of considerable partnership working between landowners, local people and businesses and the Mayor of London."

Marina Thaine, director of Riverside Communities, the company set up by County Hall residents to oppose the scheme, said: "It is regrettable that in the face of the mountain of evidence presented at the public inquiry about the huge damage that this application would cause to one of the country's most important sites, and the minimal benefits of this application, the secretary of state has backed developers of high rise luxury housing ahead of Londoners.

"Only time will tell whether this Doha look-alike facing the world heritage site of Westminster will spoil forever the character and heritage of the heart of our capital city.

"An immediate concern is how the developers will facilitate movement for the 25+ million annual visitors to this area once their entire site – including vast areas of the current Shell Centre accessible for some 50 years – is boarded up for what appears to be a six-plus years construction programme."

Mayor of London Boris Johnson said: "This scheme includes important new homes and fantastic new public space in a high quality design that will make a welcome contribution to London's skyline.

"It will help rejuvenate a renowned part of our city and pave the way for thousands of new jobs in the area. Giving it the go-ahead is absolutely the right decision."

• Read the inspector's report and minister's decision letter in full