Plans to regenerate a key area of the town centre have been approved at the second time of asking after the developer promised more affordable housing.
The Thames Side Wharf development will include 97 apartments and an arts quarter.
Fenwick, which owns the Bentalls store, increased its contribution to £500,000 after its plans were rejected last month.
Councillors were split along party lines in last week’s development control committee meeting.
Conservative councillor Richard Hudson said he voted against the plans because he thought the revised affordable housing contribution was still not high enough.
He added: “I think he [Fenwick] is taking the mickey and I think they [the council] have fallen for it.
Liberal Democrat committee chairman Councillor Vicki Harris had called the initial £266,000 affordable housing offer “absolutely laughable”.
She said this week: “It’s not just that they are giving us half a million. If there is an adjustment in land costs then we will end up getting more for our affordable housing.”
Fenwick chairman Mark Fenwick said: “We have been personally involved in the development plans for the regeneration of this site for many years.
“It is very much part of the Kingston master plan and permission to go ahead to turn it into an attractive, high quality residential development will transform this part of the riverside, offer exciting opportunities for local businesses, and generate a significant number of jobs.
“The arts quarter will provide galleries and areas where local organisations can showcase art, sculpture, fashion and digital media projects, as well as a public space, a café and restaurant and terraced areas.”
Fenwick will contribute almost £2,000,000 in total under a Section 106 planning agreement, including £245,000 for education and £93,500 for health and social services.