The decision was reached after a lengthy meeting between the Council's Western Area Planning Committee and Standard Life Investments and Shearer Property Group, which are jointly developing the £130m retail scheme.

The scheme is designed to boost the retail fortunes of the town, complementing the existing shopping areas as well as Newbury's market-town character and also provide an improved public frontage to popular Victoria Park. The proposals feature a mix of top high street names, along with a large new Debenhams department store, and a new multi-storey car park.

In March this year, Standard Life Investments and Shearer Property Group, announced that financial viability of the project was being undermined by the rising costs of construction and land acquisition. Consequently they proposed amendments to the developer contributions attached to the planning permission, in order to put the scheme back on a firm footing.

It was those proposals that went before members of the Council's Western Area Planning Committee and which, after lengthy debate, were agreed.

West Berkshire Council leader, Graham Jones, said: "Councillors and the public were no doubt at one, in considering this a difficult decision to have to make. Yes, the community will get less than originally planned for but, importantly, this is not a financial loss or cost to the taxpayer. Furthermore, the developer will still fund works to mitigate the impact of the development, including necessary road improvements.

"The most important point is that the scheme can now go ahead and, once complete, will bring huge benefits to the town and the people of West Berkshire.

"The alternative would have been to go back to the drawing board which would have meant the relative dereliction that is currently Park Way would have remained as it is for years to come, benefiting no-one."

The result is that the developers will be providing almost £2m  in contributions for community benefit, as against the original figure of £3.6m.

The money will go towards improvements in transport, education, crime prevention, healthcare, libraries, community care from social services, and the fire service.

Standard Life has said that the approval would allow construction of the new shopping facilities to start in August this year, with the scheme completed in Autumn 2010.