A £65 MILLION hotel planned for the heart of Edinburgh's Old Town has been given the go-ahead despite despite concerns being raised by UNESCO and local heritage groups.

The 225-bedroom hotel - descending from Victoria Street to the Cowgate - will feature a bar, restaurant, cafe, retail and commercial units.

The crumbling 19th century, A-listed India Buildings at the top of Victoria Street is a key part of the proposed redevelopment, as is the B-listed Cowgatehead Church and a further C-listed building.

Jansons Property, who are behind the development, say that hundreds of jobs will be created and experts have estimated that it could be worth more than £5 million a year to the city’s economy.

However, objectors among the Grassmarket Residents' Association say that the new buildings - higher than the tenements which occupied the plot until the 1950s - would spoil views and block light from the next-door Central Library.

And they have criticised the council for selling off the publicly-owned land to the developers instead of reserving it for housing or a library extension.

Andy Jansons, Managing Director of Jansons Property, welcomed the council's decision. He said: "At the heart of these proposals was the desire to create a quality development, that was respectful of its location within Edinburgh’s historic Old Town, but also looked to regenerate and bring new life to both the existing listed buildings and the long established gap-site at the Cowgate.

"I strongly believe that this has been achieved, and that a four-star hotel will bring a great number of benefits to the area including significant visitor spend and the restoration and reopening of some of the area’s historic old closes."

He added: "I am also pleased that the committee recognised the role the development will play in both revitalising the site, but also adding employment opportunities that will be of great benefit to both the Old Town and surrounding area.

"As our track-record has shown at both SoCo and Edinburgh Park, we are committed to investing in Edinburgh and continuing to bring high-quality developments to Scotland’s capital."