Council bosses have been accused of wasting a vital chance to provide affordable homes for key workers.
Brighton and Hove City Council planners approved the council's application for 27 homes on the Knoll Infants School site in Stapely Road, Hove.
The decision angered planning committee councillor Jenny Barnard-Langston, who claimed a golden opportunity to attract more teachers to work in the city had been lost.
She wrote to council chief executive David Panter in June asking him to use the entire site to build affordable homes for key workers, including child care facilities.
Mr Panter told her: "A link-up with a housing association to build housing for key workers deserves consideration and the Knoll site might just offer the potential for such a development."
He said the LibDem councillor's suggestion that all the homes should be for key workers would be given serious consideration.
However, the planning committee approved a scheme for 27 three and four-bedroom homes and only a small recreation area when it met on Wednesday.
Councillor Barnard-Langston said: "I wrongly thought my suggestion had a lot of merit and David Panter appeared to agree with me.
"We have difficulty recruiting teachers and other key workers. They are unable to get homes because of high property prices in the city.
"The council-owned Knoll site would have been an ideal opportunity to tackle what is becoming a growing problem."
The council has approved the scheme to help pay for two merged schools to be able to move to a single site.
Knoll Infant School merged with Goldstone Junior School in Laburnam Avenue, Hove, to become Goldstone Primary School two years ago.
However, the school has continued to operate on separate sites since council bosses realised that selling the Knoll site would not raise enough money.
The new scheme will be more profitable and will help pay for building work to allow pupils who are still using both buildings to move on to the main site in Laburnam Avenue.
Councillors imposed conditions that the Knoll site should include 40 per cent affordable housing.
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