The Mayor of London has given the green light to a new 150-room hotel by the Kingston riverside - but told developers to include only 10 parking spaces.

News of Ken Livingstone's approval was met with "gobsmacked" disbelief, as businesses struggled to comprehend how the £60million hotel on the former power station site in Skerne Road would cope with so few parking spaces.

The plan, for a building up to 15 storeys including 370 flats, will now appear before Kingston Council. But councillors will find it hard to refuse on grounds of parking, since it has the Mayor's approval.

Lisa Gagliani, head of Kingston Chamber of Commerce, said the enthusiasm for the hotel was almost unprecedented among businesses, but taking spaces from nearby car parks would hurt local businesses and put off shoppers.

She said: "Having no parking at a hotel is some mad Utopian dream that will never happen. Effectively it's an invitation to the well-heeled people that are going to spend money in Kingston to go and spend it somewhere else. I am completely and utterly gobsmacked."

In June, Mr Livingstone considered the application and told developer NHP to increase affordable housing and decrease parking, in line with his London Plan.

A second report on August 1 included more affordable housing - 74 units in total - and a decrease in hotel parking spaces from 100 to 10. The 370 flats will have 185 spaces for residents.

The affordable housing provision is still below guidelines, but Mr Livingstone granted some leeway to bring the brownfield site into use, especially as it will cost NHP £10million to encase the electricity substation in concrete and steel. Total build costs will top £60million.

Tony Arbour, Greater London Authority (GLA) member for Kingston, said: "The Mayor has given the green light to a monster. This over-development is quite inappropriate for a riverside site.

"Moreover, the provision of so little car parking will put unbearable pressure on nearby streets and overflow into Hampton Wick."

He urged Kingston Council to ignore the mayor's endorsement and reject the scheme.

Mike Spenser-Morris, from NHP, said: "There is a 702 space multi-storey car park immediately next door in Seven Kings and how often is that full? And that's without Bentalls car park B (currently being rebuilt). The GLA and Transport for London have said they would not accept the level of car parking we had. They have the power to refuse applications so there's no point going against it."

Further pressure on parking spaces could be generated by the plan to demolish and rebuild large parts of Kingston's shopping area under the K+20 scheme. The 700 spaces at Eden Street car park are likely to be part of the plan although it is not known when building work will start.

NHP also highlighted the business response to a recent survey, in which 95 per cent of respondents said they were in favour of a four-star hotel.

The London Development Agency said the loss of crèche and day nursery on the site, which was previously agreed with Kingston Council, was regrettable. A conference centre has also been removed from the original plan.

If Kingston Council passes the plans, the mayor has reserved the right to take 14 days to give final approval.