A controversial plan to demolish a popular restaurant and food shop to make way for a new development is set to go ahead after an appeal was upheld.

Residents launched a major campaign last year to fight against plans for the project at Canonmills in Edinburgh, which falls within a conservation area.

A Scottish Government planning reporter has now ruled the building at 1-6 Canonmills Bridge, home to the Earthy restaurant and organic food shop, can be knocked down.

The decision, published on Thursday, will pave the way for two restaurants, six flats and three town houses to be built on the site.

A planning proposal for the development itself was granted by the council in 2013. A second application for demolition had to be considered separately.

Councillors appeared to go back on their original decision by voting against the demolition proposals in August 2015, after a petition attracted more than 7000 signatures.

In her decision notice, reporter Frances McChlery said the project would “comply with the development plan” and demolishing the current building would not have an adverse effect on the surrounding conservation area. She described the Earthy building as “atypical”.

She wrote: “I do not consider that the presence of the building contributes to the appearance of the conservation area to any significant degree.”

Opponents to the development on land owned by Glovart Holdings Ltd said they were shocked at the decision and vowed to continue their campaign.

In an online post, Save 1-6 Canonmills Bridge said: “We are stunned by the lack of democracy. Watch this space.”

Local MP Deidre Brock said she was “sorely disappointed” by the decision.