Key employment areas in Islington will be protected from residential conversions after the town hall reached a compromise with the Government.

Zones around King’s Cross, Upper Street, Holloway Road, Finsbury Park, Hornsey Road and Archway will be exempt from the controversial changes to planning law brought in last May, which allowed offices to become flats without planning permission.

It comes after a drawn out battle between the council and the former Planning Minister Nick Boles which saw the ruling upheld in the High Court in December and a failed “Article 4 Direction” which would have made Islington exempt from the policy.

But after discussions with new Planning Minister Brandon Lewis, a new Article 4 that covers the most important and intense clusters of businesses and charities in the borough was agreed.

Cllr James Murray, Islington Council’s executive member for housing and development, said: “The Government’s initial decision to block us was wrong, and we were right to challenge it.

“I’m pleased that we have been able to have a constructive dialogue in recent weeks and reach an agreement which protects the most important clusters businesses and charities in the borough.

“We have said from day one that the Government’s office-to-flats policy is having a detrimental effect on Islington and, in fact, right across London.

“The extremely high value of flats in Islington meant that small businesses and charities were being evicted – and so today’s agreement is important as it means we will be able to protect many of them.”

In the 16 months since the law came in 71 office buildings in Islington have obtained “prior approval” for conversion to residential since the law changed, with 11 further applications submitted.

Around half of the above floorspace was occupied, which in some cases has led to small businesses and charities have being evicted.

Developments that already have permission – such as plans for the Archway Tower in Junction Road which will turn the 16-storey office block in to 118 new flats – will not be effected by the exemption.

Of the homes created in these spaces, the council estimates that two out of every three is a one-bedroom unit or a bedsit. No affordable housing has been created - despite the potential to deliver around 350 affordable homes.

Parts of the borough in the Central Activities Zone, such as Finsbury, were already exempt from the new law.