A historic theatre will be converted into an eight-screen cinema complex after the government threw out a planning appeal.

Brighton and Hove City Council approved the £17.5 million plan to convert the famous Brighton Hippodrome, in Middle Street, in July this year.

The decision was referred to the government. But the Department for Communities and Local Government said it would not be “calling in” the proposal.

As a result the council's original planning permission will stand.

The news came a day after it was named the most at-risk theatre in the country by the Theatre Trust.

While those behind the development have welcomed the news, members of the Our Brighton Hippodrome group described it as a “bad day for Brighton and a bad day for theatre”.

The plans will see an eight-screen cinema complex built in the historic theatre, which has hosted the Beatles and Max Miller.

A council spokesman said the decision would herald a “new chapter” in the Hippodrome's history.

She said: “This is a practical way forward which means the building will be retained and brought back into use for the public.

“Some of the historic features will be reinstated and the alterations inside the building are also reversible so should a proposal come forward in the future for a theatre, that would be possible.”

David Fisher, from Our Brighton Hippodrome, described the news as “desperately disappointing”.

He said: “We think we have done everything we possibly could to save it. It is just very disappointing the council has not backed us nor has the government.

“We will go away and have a meeting but it is not looking very optimistic.

“It's a bad day for Brighton and Hove and a bad day for theatre in general.”

A Government spokesman said the application was not suitable to be “called in” as it was in keeping with the National Planning Policy Framework.

She said: “This is a matter for Brighton and Hove City Council.

“Only a very few planning applications are 'called in' each year, as this involves the planning decision being taken away from the local council and community.

“Ministers carefully considered the proposal against the published quasi-judicial guidelines and were satisfied that the application did not raise issues of the wider strategic or policy nature envisaged by the call-in policy.

“As such the application should be determined at local level.”