Go-ahead has been given for the construction of student flats on land where it was hoped much-needed family homes would be built.
St Andrews Memorial Hospital is to be demolished to make way for accommodation for 241 students.
A development framework for a large parcel of land at St Leonards field had earmarked the site of the former hospital, which has been replaced by a new facility on the south of the town, for housing.
However, it emerged four out of the five potential buyers for the NHS-owned Abbey Walk site wanted it for student digs.
Bangor-based Watkin Jones Group intends to build the flats, ranging in size from studio apartments to six-bedroom flats, in the corner of St Leonards fields, where extensive house-building is already taking place.
St Andrews councillor Brian Thomson attempted in vain to persuade fellow members of Fife Council’s North East Planning Committee to reject the planning application.
He said: “We have a huge affordable housing crisis in St Andrews. It is six years since any affordable housing unit was completed in the town.
“This site was zoned in the strategic development framework for residential use. To date the only housing developed here has been very expensive or available to people over a certain age as it has been classed as special needs housing.
“It is very disappointing that so far no family accommodation has come forward.”
Another of the town’s councillors, Dorothea Morrison, claimed permitting the development may free up housing elsewhere in the town by reducing demand among students for rented accommodation.