South Kesteven District Council's development control committee approved Stamford Property Company's application for small industrial units at the back of Stamford business park in Ryhall Road.

Tom Hindmarch, director of Stamford Property Company, said the units would be suitable for workshops, offices and trade counters. He said: "We are delighted – I hope we can get these units built as soon as possible, as we feel there is a demand in the town. The size of industrial units in Stamford is getting smaller and there are becoming less and less, so we hope these new units will encourage businesses to stay in Stamford rather than go to Grantham or Peterborough."

Work has already started to demolish existing business premises on the site, which is at the back of Topps Tiles and Cummins Generator Technologies. The entrance to the site will be next to McDonalds.

The application was originally for 28 business units, but Jenny Sherlock, estates manager at the company, said the number of units had been reduced there had been a question mark over whether some of the land could be built on.

"We would hope that there will be enough interest to make this worthwhile and if there is the demand, we many consider applying for planning permission to build the other 12 units," she said.

Conditions were imposed by the committee regarding how waste will be dealt with at the site, after the Environment Agency raised concerns about how surface water and foul drainage would be disposed.

Stamford Chamber of Trade and Commerce had objected to the original application, because it believes it was in conflict with the 1995 local plan for the area, which expired recently. The local plan included land earmarked for a relief road, which the business units encroach on to.

Its president Tim Lee said: "The application has been changed so that it does not infringe on the relief road, so we have no problems. We have no objection to the development of business units in this locality."

Contractors have not yet been instructed for the new build.