A high-profile campaign to save a business complex in the heart of Primrose Hill has been dealt a serious blow after the government said plans to turn it into luxury housing could go ahead without planning permission.

Communities secretary Eric Pickles on Friday upheld an appeal by the owner of Utopia Village in Chalcot Road to turn the home of 22 businesses into 53 residential units using permitted development powers.

The powers, relaxed by the coalition government in 2013, allow offices to be converted into residential use without requiring full planning permission.

Mr Pickles’ decision sees Camden Council’s original rejection of the application back in 2013 overturned.

Councillors at the time listed 15 separate grounds on which to refuse the application, saying the plans would lead to “parking stress”, “traffic congestion” and “unacceptable additional pressures on existing community facilities in the area”.

A number of high-profile Primrose Hill residents also waded into the row complaining the loss of businesses would be “devastating” for the high street.

Retail guru Mary Portas, playwright Alan Bennett and Baroness Joan Bakewell all signed a letter to “Save Utopia Village” saying permitted development policies had led to businesses being replaced by “homogenous housing dormitories for city workers or absentee property investors”.

But in its submission to Mr Pickles, the council reduced its argument against allowing the application to one issue: its impact on privacy on surrounding properties.

Camden Council said the project was in contravention of Article 8 of the European Convention on Human Rights (ECHR).

Disagreeing, Mr Pickles in his decision last week said Utopia Village should be allowed to be turned into housing using permitted development powers.

An appeal against the decision can be lodged at the High Court.

Camden Council continues to battle against the controversial permitted development powers, saying they have “harmful social, economic and amenity impacts and restrict [the council’s] ability to properly plan for the borough”.

It is in the process of seeking protection for some areas of the borough from the relaxed laws after research it had commissioned found more than 33,000 jobs in Camden could be at risk from conversions.

Known as an Article 4 direction, the measure would come into play in October 2015 and would create a number of protected enclaves including in Hampstead, West Hampstead, Camden Town, Primrose Hill, and West Hampstead.