Developers have won a High Court case to regenerate Shepherd’s Bush Market, but opponents have vowed to keep fighting the scheme.

A legal challenge has been overturned that threatened the multi-million pound project by developer Orion to build 200 new flats, upgrade the market and create a new public square between Uxbridge Road and Goldhawk Road.

Mr Justice Keith Lindblom did not agree that Hammersmith and Fulham Council failed to follow appropriate planning guidelines.

Council leader Nick Botterill has hailed the result of the judicial review as a victory and believes revamping the 100-year-old shopping arcade will inject £3million into the local economy each year.

But opponents are hopeful that the result of a separate inquiry into the lawful use of compulsory purchase orders (CPOs) imposed on 13 shops in Goldhawk Road and 140 stall holders could still halt the development. A result is expected by the end of the year.

Mr Botterill said: “This is a victory for common sense and we can now get on with the important work of breathing new life into Shepherd’s Bush Market so that future generations can enjoy a vibrant and thriving shopping destination to rival the best in London.”

Hammersmith MP Andy Slaughter, who has supported traders throughout the legal challenges, said: “It’s disappointing, but the much more fundamental issue, the human rights issue, being addressed in the inquiry asks whether it is reasonable to destroy peoples’ livelihoods to let someone else make a profit.

“It’s not over until it’s over. If we win the CPO inquiry the scheme could be scuppered. If not we (Labour) hope to win in the local elections in May and we will do whatever we can to protect people and local businesses.”

He added: “CPOs are usually used for major schemes like HS2 for public benefit, this is done on the basis of private benefit which has been a very distasteful move from the council.”

The council said it continues to offer new premises for all affected businesses within the new market.

Orion said there will be a phased programme of work so that parts of the market remain open at all times and have offered a £500,000 fund for market traders to promote their businesses and to compensate for any losses during construction.