Ambitious plans to transform Oyston Mill, close to Preston Docks, into 259 apartments has been approved by the town hall.
Planning committee members were told officers from the University of Central Lancashire had warned there is a surplus for student accommodation across the city.
But Coun David Borrow, vice chair of the committee, said facilities like the mill masterplan would free up terraced housing across the city and in his ward in particular.
The Labour representative for Moor Park told colleagues: “Over the last few years we’ve seen developments providing a lot of specifically student accommodation in the city centre and I think the long term effects will be to free up some of the terraced housing that was taken up when the university expanded 20 years ago.
“To see a lot of those houses that 20 or 30 years ago would have families in to return to that use would be a really good step forward in terms of the development of the city.”
The four-storey mill on West Strand has been largely vacant for a number of years with a host of communal facilities, gym and cafe included in the conversion plans.
Council officers informed the committee there was a demand for “high quality” student accommodation and the site has good transport links to the main university campus.
However, Coun David Hammond expressed concerns over the vehicular entrance to the site given that it is already a busy junction at West Strand and Watery Lane.
The plans - which were recommended for approval by council officers - were given the green light by the committee members with a vote of 11 to one.