Proposals had been submitted to Hartlepool Borough Council planning department to carry out the works at the McOrville Inn public house in Elwick.
The application from pub owner Doug Hennells sought to gain permission for a single storey extension to the rear to provide a restaurant area, and to convert an existing unused storage space to provide three rooms for letting.
Councillors at the latest meeting of the local authority’s planning committee voted to give the proposals the go-ahead by nine votes to two.
Speaking after the meeting, Mr Hennells said if they had not got planning permission they would have had to think about turning the site into housing.
He added: “At the end of the day, you know how many pubs are closing down, you’ve got to work extremely hard to make them profitable and this was never going to be profitable just on wet sales.
“All the good will and all the locals wouldn’t have kept it afloat, so it was vital it went through to get the extra revenue in.
“It’ll employ more staff, it’ll make a tremendous improvement, it’ll make it a viable pub.”
Graeme Pearson, from planning agent GAP Design, had explained at the meeting how the pub is in the “heart of the village” and the work will benefit people in the area and help provide a “quality food” offer.
He continued: “We consider it essential to the survival of the pub to extend it to provide the required floor space and separate restaurant area from the drinking area.
“The provision of three lettable rooms will not only benefit the business financially, it will provide much-needed overnight accommodation for the town.”
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Council officers had recommended the development be refused due to concerns it would cause harm to a “heritage asset” and “detract from the character and appearance” of the site.
The pub is within Elwick Conservation Area and is also a locally listed building.
However councillors ruled the development should be approved, arguing it will be positive for the area and provide important economic benefits.
Councillor Paddy Brown, chair of the planning committee, said: “I think there is a business there that is struggling and probably needs all the help it can get.”
