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Plans for a three-storey block of six one bedroom flats have been passed, despite strong opposition.
The social housing will be erected in a small patch of grassland at the junction of Roman Way and Horn Street in Cheriton.
Dozens of comments in opposition to the development were received, but were outweighed by Shepway District Council's need to build more affordable homes.
Gordon Banks, who owns Banks Engraving Services, a shop that will be directly behind the flats, spoke at the meeting last night.
He said: "We accept the need for more housing but we believe this site is not suitable.
"The two established businesses will be greatly effected, we will be relegated to the back street."
The businesses in Roman Way heavily rely on passers by to generate trade.
Cllr Peter Gane spoke in opposition to the application, he said: "This development going up will change the area.
"I think it will make a pretty bad development."
Andy Jarrett, who submitted the application, said: "The council aims to provide a geographical spread of affordable homes.
"Councils will be able to free up other family homes.
"All development plans cause concerns to people but the impact is not great when you look at the possible benefits."
Mr Jarrett said there are 45 people looking for single-bed homes in Cheriton alone.
Senior planning officer Robert Allan confirmed that 45% of the land will be used for the development.
Cllr Jennifer Hollingsbee said: "I have a lot of sympathy for the local residents and I have sympathy for people on our housing list.
"We have to weigh this up against local residents who are not in favour and the residents who need housing.
"These flats will be rented to local people - this really is an important issue to me."
Cllr Mary Lawes said: "I totally agree we are in desperate need for housing but I have concerns that this is a small site.
"This should be built on a bigger site - we go to all these different meetings about these open spaces but then they are going to be taken away, it is absolutely crazy."
Eight councillors voted in favour of the application, with one against and there were two abstentions.