The authority’s cabinet unanimously supported a request from Much Wenlock Town Council to seek Local Nature Reserve (LNR) status for Windmill Hill.
It is hoped the move will help to promote the site, which boasts a 17th century windmill and breathtaking views over the town, and formally recognise its value to locals, visitors and wildlife.
It will also open up funding opportunities for its maintenance and offer protection in the planning system.
As Shropshire Council does not own the land, members agreed to delegate power to the town council, which will now undertake the formalities of securing the LNR designation.
Councillor Dan Thomas, who represents the town, spoke at the meeting to urge cabinet to grant the town council’s request.
He said: “Windmill Hill is a beautiful landmark steeped in the history of Much Wenlock.
“The Windmill stands high above the town, looking directly at William Brookes School and watching over Much Wenlock.
“As a child growing up here, its steepness was always used by murderous PE teachers setting the cross-country route.
“It is used for recreation and education for people of all ages.
“A book written by local resident Mike Norrey in 2010, records the windmill project and a comprehensive history of this site from mediaeval times.
“In 2018 I, with a committee, lit a beacon to commemorate 100 years since the end of the First World War, where a military bugler played the Last Post, and the Beacon shone for all the town to see.
“Its nature and beauty are shown throughout the year, especially in summer, when thousands of wild orchids bloom.
“A team of volunteers has well managed the Windmill in the Windmill Trust, and the adoption of Windmill Hill being a local nature reserve will support this.
“This designation will help attract more visitors and funding opportunities to safeguard its future.”
A report to cabinet by Mark Barrow, director of place described the site as “a superb and highly visible natural feature” of the town.
The report said Windmill Hill is one of 700 Local Wildlife Sites Shropshire, and “one of the best limestone grasslands” in the county.
The disused quarry at the foot of the hill is a Regionally Important Geological and Geomorphological Site (RIGS) and the windmill tower is Grade II listed.
The site will continue to be managed by the Much Wenlock Windmill Trust.