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A consortium comprising BUREDI, a joint venture between The Burrell Company and EDI Group, and housebuilders Bishop Loch will now push ahead with proposals after planning permission was granted following a public enquiry. The development is set to transform the site, which has lain derelict since it was destroyed by an explosion in the 1970s.

Under the plans, 24 new apartments will be built in three separate blocks overlooking the Water of Leith. The remains of the water-powered mill - a classically designed rubble-walled granary of the early 1800s - will be preserved and form an integral and important feature of the development.

The properties will be located within the Dean Conservation Area which forms part of the Edinburgh World Heritage Site and was historically Edinburgh‚s largest milling settlement, benefiting from the riverside location. Since the 1970s the area has largely been regenerated through the introduction of new residential properties along with the opening of the Water of Leith Walkway which provides access routes going as far as Leith in the north and Balerno in the west.

Andrew Burrell, Managing Director of The Burrell Company, said: "The Dean Village is a very popular area due to its beautiful setting on the Water of Leith and its delightful village atmosphere right in the heart of the city.

"With its ongoing regeneration since the 70s, the area has become extremely popular for people looking for a quiet and peaceful location to live but with good and easy access to the city."

Ian Wall, Chair of EDI Group, added: "BUREDI already has a track record of sensitive development across the city. Together with Bishop Loch we will use our combined expertise and experience, to retain the original charm of the site offering a high-quality residential development that will enhance the amenity of this site."

Harry O'Donnell, Chairman of Bell's Mills Ltd, said: "We look forward to now proceeding with the development which we believe strongly will enhance the area. The scheme for 24 residential units is sensitive to the local environment and will enhance the historical setting provided by the neighbouring listed buildings."

The site is located between the Menzies Belford Hotel and the Edinburgh Sports Club with access to the Water of Leith Walkway. Work is due to begin in this year and it is anticipated properties will be released for sale in early 2006.

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