A £40m riverside project promising to regenerate a near derelict riverside plot directly below one of Brunel's famous railway bridges, has been given the go-ahead.

After two years of delay, consultations, reports and set-backs, Monmouthshire County Council planners have now said yes to the building of 169 apartments and houses by the River Wye in Lower Chepstow.

Work on the site is expected to start in earnest later this year and will involve the demolition of the Furniture Smart showroom and the building of a range of apartment blocks, office units, cafe and a riverside walk with a 'lookout deck' onto the river.

It will also mean the phased move of the Osborn International brush plant, which employs about 60 workers, and is one of the last manufacturing works anywhere near the town centre.

Mr Peter Mills of Wyndel Property, the developers behind the scheme said: "We believe this means the regeneration of the lower end of Chepstow. It's a quality development of 160 new houses which will hopefully create the impetus to regenerate the bottom end of town which has largely been derelict for many years."

The scheme hasn't been without its problems. Builders withdrew at the onset of the financial crisis and there have been over 34 different reports including a traffic study costing more than £40,000.

"It's been a long haul getting to where we are now," admitted Mr Mills. "Traffic was always the issue. There's a perception that people are commuting at 8am and then coming back at 5pm, but our study shows this isn't true. Pollution on Hardwicke Hill should also improve because there will be fewer HGVs coming out of the town centre."

He did agree one of the problems was the traffic light bottleneck coming out of the town's one-way system where "traffic lights by the church don't talk to the traffic lights at Chepstow" and said the bigger issue for congestion would be the proposals for more than 1,000 new houses in Lydney and another 200 on fields by Wyedean School.

Cllr Jacqui Sullivan, who spoke against the scheme, accepted it was now inevitable.

"We had three main issues: Flooding, not from the river but from water coming down from the town; and traffic chaos. People in lower Chepstow do take ages to get out of town if something goes wrong – like work on the traffic lights last week which meant all businesses lost trade.

"There are 270 properties in lower Chepstow. Another 169 means about 60 per cent more than we've got already.

And then there's parking. There's not enough off-road parking at the bottom of town and with the success of the Drill Hall, which is great, there's even less and going to be even less".

•Turbine plant go-ahead – page 8.