A 460FT observation wheel will be built on the Newcastle Quayside, after councillors gave the green light to the landmark.

The huge structure, known as the Whey Aye, won the backing of city leaders at a heated civic centre hearing on Friday morning.

Amid accusations that the £100m project would be “cheap and nasty”, the developer behind it said that the wheel would become a world famous attraction.

Newcastle City Council’s planning committee voted to approve permission for the scheme by a margin of eight to four, after a four-hour hearing.

While the project had been recommended for approval beforehand, there was some doubt as to whether it could go ahead without councillors also backing a second application that would allow a giant LED advertising screen to be attached to the wheel.

But World Wheel Company bosses successfully lobbied for a decision on the “incongruous” screen to be deferred for further negotiations on its size. They also promised that the Whey Aye itself could go ahead without the extra revenue of the ad screen “if push comes to shove”.

It is expected that the site would attract an additional 261,000 visitors to the city every year – generating almost £15m annually for the local economy.

The wider ‘Giants on the Quayside’ development also includes a food and drink hall, a family entertainment centre, and a state-of-the-art virtual golf club.

The occasionally ill-tempered hearing also laid bare deep rifts within the council’s leadership over the controversial plans.

Labour cabinet members Nick Kemp and Veronica Dunn, who both represent Byker, launched withering attacks on the Whey Aye.

Coun Dunn claimed that the “cheap and nasty” wheel would be left in ruins in ten years and, in a staggering attack on the council, claimed that the local authority had hidden its interest in the project being approved. She said that the democratic process and independence of the planning committee has been undermined, adding: “We are asking the planning committee to show some real resolve and put people first, not profits.”

Coun Kemp said that the wheel development would “make an already fragile highways infrastructure broken” and claimed that public consultation on the huge plans was “woefully inadequate”.

But Labour cabinet colleague, Coun Ged Bell, said that the Whey Aye was “an economic driver that our city simply cannot afford to turn down”.

He added: “This is the missing piece in the regeneration of our Quayside. It would bring a world class experience to a truly world class destination.”

Earlier, the St Peter’s Basin Neighbourhood Association said that the overwhelming majority of people living in the area do not want the Whey Aye to go ahead and accused the World Wheel Company of being “discourteous”.

Dr Edward Wainwright, of Newcastle University’s School of Architecture, Planning & Landscape, told the committee that there would be “little or no direct community benefit” from the Whey Aye and that the visitors to the site will put a heavy strain on local roads and public transport.

He added that the main benefit of the proposal would simply be “to the profit margins of the developer”.

The World Wheel Company hit back, saying their “elegant” wheel would “become an iconic regional landmark”.

The firm’s Newcastle chief executive, Phil Lynagh added: “The development with the wheel at its heart will be world famous. We are turning dereliction into something to be celebrated.”

Mr Lynagh confirmed that the Whey Aye wheel could be built and operate without the LED advertising screen being approved, if a compromise on its size cannot be reached.

However, he predicted that impending negotiations will deliver a solution on the screen “pretty quickly”.

It is expected that the entire ‘Giants on the Quayside’ development will take up to two years to build.

The 460ft wheel, which is taller than the London Eye, has been granted permanent planning permission – not the temporary 10-year approval that was first proposed. However, the council has inserted a clause that would allow the local authority to call in a £700,000 bond from the developer and decommission the wheel if it falls into disuse.