A planning inspector concluded that the “very substantial benefits” of the new housing estate on a greenfield site west of Park Farm, Butt Lane, outweighed the harms, including to nearby listed buildings.
It follows a seven-day public inquiry last year after developers Barwood Development Securities appealed.
A total of 134 residents, Thornbury Town Council and Oldbury-on-Severn Parish Council objected to the outline application for the two- and three-storey houses, of which 208 – 35 per cent – will be classed as affordable.
South Gloucestershire Council failed to determine the application in time and the appeal took the decision out of its hands, but planning committee members agreed that they would have refused permission if they still had the power to do so.
However, planning inspector Christina Downes has approved the scheme, which includes a primary school and nursery, retail/community hub, a new bus link and open spaces including parkland, footpaths and allotments.
In her report, published on Monday, she said: “The proposal would offer a wide range of public benefits.
“There would be harm to the significance of a number of heritage assets by virtue of the appeal development being within their setting.
“These include the Thornbury Castle assemblage, the Church of St Mary the Virgin, The Sheiling School and Thornbury Conservation Area.
“The Church and parts of the Castle are Grade I heritage assets, which are considered to be of exceptional interest and rarity.
“However, there would be a package of public benefits to which I have attributed very substantial weight.
“In my judgement it would clearly outweigh the harm that would arise to the significance of the heritage assets.”
The inspector said the loss of 25 hectares of “best and most versatile” agricultural land would be “harmful” but that the amount of land was relatively small
“In my judgement these adverse impacts would not significantly and demonstrably outweigh the very substantial benefits,” she wrote.
Her report said the council did not have a five-year supply of land to meet its housing needs.
It said: “I conclude that the appeal site has the potential to become a relatively accessible location where new residents will have the option to choose a number of sustainable travel opportunities rather than rely on car journeys for their trips.
“That is not to say that the car will not be used because that would be unrealistic.
“The important point is that there would be reasonable alternatives available in this case for many journeys.”
She said the scheme would produce “considerable” net gains to the site’s biodiversity.
“There is local concern that Thornbury has been subject to a large amount of development in a relatively short period and that it has been difficult to absorb such rapid growth into the existing community,” her report said.
“Whilst I understand this concern it is difficult to see how it could be a reason for objecting to the scheme.
“The district council cannot at the present time meet its housing need and it has limited opportunities to provide for such growth.
“Also, there is no evidence that integration cannot satisfactorily be achieved.
“The housing register also indicates that there are many families in need of a home at the present time and there is little reason to believe that this situation is going to improve.”