Councillors have warned of “significant harm” to the community following the decision to demolish Hoxton Street’s Iceland.

Hundreds of people had petitioned the council to save the supermarket and the pharmacy next door from being torn down, and Hackney Mayor Philip Glanville stepped in to resist Blair Estates' plans.

Although council officers secured a guarantee that nine of the 25 planned flats would be provided at London Living Rent (LLR), and Blair Estates assurance that low-cost supermarket Lidl would move into the planned new retail space, concerns remain.

Cllr Clare Joseph (Lab, Victoria), characterised LLR as "quite controversial", arguing that as levels will be based on the average earnings in a ward, the rates will be "skewed" by high earners living in Hoxton.

The Victoria councillor quoted GLA figures saying that a one-bed LLR flat in Hoxton East would be over £1,000 a month, with £1,202 a month for a two-bed.

Officers explained that the reason true social housing could not be sought for the Hoxton Street property is that a building cannot be managed by a mixture of a registered provider of social housing and a private landlord.

As the properties are built to be rented out, planning officer Rob Brew said his department had been presented with a choice of the developer either making a contribution to affordable housing elsewhere in the borough, or building it on site, which is always the planning department's "preference".

Cllr Steve Race (Lab, Hoxton East and Shoreditch) warned decreased footfall from the loss of Iceland would harm Hoxton Market.

He said: "Hoxton is a well-established community with a distinct character. Though it has changed over the years, Hoxton's community has proven resilient and has remained largely intact.

"This is largely down to the high levels of social housing that surrounds Hoxton Street, with over 40 per cent of Hoxton residents living in council housing.

"The following years of development are likely to cause significant harm to Hoxton's community - the loss of a valued supermarket on the street for the period of demolition and construction will inconvenience residents, forcing them to travel much further to get to the nearest value supermarket."

A representative from developer Blair Estates said: "I am aware that this application has generated a considerable amount of public interest and scrutiny locally, all of which is translated into a real and genuine concern about the future of this site.

"I would like to reassure the community generally that our plans are predicated on making a positive, sympathetic and respectful regeneration on a site with acknowledged development potential."

Chair of the committee, Cllr Vincent Stops (Lab, Hackney Central), said: "They're going to be retail premises and it's not going to look like a supermarket, but we can't debate who occupies it.

"I know it's contentious, and I know there's been publicity around it, but as a planning committee we can't get involved with who goes into this retail outlet."