A £1.8m plan for a new theatre and centre for the performing arts in the centre of Edinburgh has been given a planning green-light.

Councillors on the city's planning committee yesterday approved the plan by ballet star and director Peter Schaufuss to create the centre in the Charlotte Baptist Chapel in Rose Street.

A rival plan, to open a restaurant, bar and accommodation in the same 1908 building, by Glendola Leisure, was rejected.

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In recent years there has been controversy over the historic building's fate, with plans for a 'super pub' on the site abandoned, but Peter Schaufuss, a ballet star and lauded director, is now prepared to transform the building into a new arts venue, the Rose Theatre.

The Danish director is pledging his own money to transform the baptist chapel into a 600-seat theatre and year-round performing arts hub.

His ambitious bid has secured the backing of ballet star Darcey Bussell, the Ralph and Meriel Richardson Foundation, the actress Felicity Kendal, and theatre owner and Edinburgh Comedy Awards director Nica Burns, among others.

Councillor Richard Lewis, culture convener at Edinburgh City Council, also backs the plan, believing it would provide the city with a medium-scale theatre it needs.

The scheme was passed by the planning committee and now Mr Schaufuss is expected to enter negotiations with Glendola over the ownership of the building, which was a place of worship for more than 100 years.

He said: "I am delighted that we got planning permission and looking forward to an exciting future for Rose Theatre Edinburgh."

An impact study estimates the theatre and dance complex would inject £5m to the local economy, and attract 80,000 visitors over the annual Edinburgh Festival period.

Schaufuss, who performed many times in Edinburgh's festival as a dancer and directed many times in the city, said he is hopeful that if the plans go ahead we can begin "putting on performances in August 2016."

Schaufuss, knighted in Denmark, has a distinguished career as a dancer, director and choreographer.

He was director of the London Festival Ballet, now English National Ballet, where he founded the English National Ballet School, Berlin Ballet at Deutsche Oper Berlin and the Royal Ballet in Copenhagen, and now has his own company, the Peter Schaufuss Ballet based in Holstebro, Denmark.

In his vision statement for the plan, Mr Schaufuss said the venue would offer a year round schedule of music, drama, opera, dance, and exhibition, as well as the home of a "world class dance company and its school."

The first and second floors would be a theatre, with seating between 210 and 623 depending on its configuration.

The street level would house the foyers for both theatres, the ancillary theatre café and bar, as well as a separate small entertainment venue.

In the document, Mr Schaufuss writes: "I am confident that Charlotte Chapel can be transformed into an international artistic centre, one where highly regarded established companies would be found cheek by jowl with new, innovative groups, all offering productions of the highest standard, making the Rose Theatre a watchword for matchless creativity in theatre and dance, fulfilling the need in Edinburgh for a dance house and venue of this size, complementing the much larger venues in the city."