Edinburgh residents are set to protest over controversial plans which could see a chunk of the Old Town transformed to create hundreds of new homes, a five star hotel and conference centre.

Members of campaign group Save Our Old Town have called on local people to join them outside the City Chambers on Thursday, where councillors will decide whether to push on with the revival of the Caltongate scheme.

Initial proposals for a major development on the 640,000sqft site by London-based firm Mountgrange, which were first approved in 2008, fell through in 2009 when the company went into administration.

But more recently it was revealed that Artisan, a consortium of South African businesses, had struck a deal with administrators to buy most of the site, where planning permission for construction remains, for £7 million.

Now councillors will decide whether to sell off a series of council-owned properties to the developers for a total of £3.4 million, in order for them to complete the ambitious project.

Plans to demolish some of the premises, which include two listed buildings and nine flats on the Canongate, have provoked objection from local people and conservation bodies alike, who claim the scheme will have a negative impact on the historic area.

Julie Logan, chair of Save Our Old Town, said the community were dismayed at council officers’ recommendation to move forward with the project.

She added: “There’s no information on who this company is, where their money’s come from, why it’s so desperate that it has to go through now rather than some discussion on how it’s going to benefit the community.

“Is it appropriate to be selling the council flats off as surplus? Especially when the Scottish Government are saying we’ve got to be investing in community housing - what little housing we do have has been sold off.

“We were led to believe that the council were serious about reconsidering the redevelopment of the site. To now turn around and take that away when local organisations have been looking into alternatives on how that land can be turned into better economic use is a slap in the face for the whole community here.”

In recent years Save Our Old Town have been pressing plans for a community space known as the Canongate Venture in the listed former North Canongate Infant School, which if agreed by the council will be sold to Artisan.

While campaigners claim the multi-million project will mean unnecessary demolition of historic buildings with no sustainable benefit to the community, council chiefs believe its revival will be key to the area’s regeneration, providing almost 1700 permanent jobs and 200 new homes.

But critics are dubious. Ms Logan continued: “To force this through when we’re only a couple of months away from a local election is quite clearly wrong. Before the last election, they pushed Caltongate stuff through in order to burden the incoming administration.

“The kind of nonsense they made over the last year or so about community engagement, they just make a mockery of it when they go ahead and do things like this.

“How can we be assured that this project is any more viable than the last one?”

Elected members will discuss whether to approve recommendations to sell off properties, as well as the possibility of using compulsory purchase powers on two additional buildings, when full council meets on Thursday.

Local councillor Joanna Mowat said: “I understand why the community are protesting and their concerns from the report – we have to sell some community assets so this scheme can go ahead.

“If we could guarantee that the scheme could go ahead then maybe it would be less controversial - we will gain additional housing along with the hotel after all. But I do understand why it’s a big change in the local area, it’s a part of Edinburgh everyone knows really well. And the real concern is that we don’t get the benefit.”

A council spokesperson added: "We recognise the right for peaceful protest but it would not be appropriate to comment further ahead of the council meeting."

IN DETAIL

The Architectural Heritage Society of Scotland opposes Caltongate