The ambulance station at Queensway, in Whitchurch, was vacated in 2013 following a restructuring of the service and has been used for storage purposes since then.
Shropshire Council planners said that even though Whitchurch has already exceeded targets to find room for 1,200 homes during the local planning period, five more would not cause harm to the "operation of local services and infrastructure".
They say Whitchurch has already found sites for 1,390 homes, either with planning permission or allocated for development.
Previous plans for residential development on the site had been rejected for technical reasons but this time the proposal was to establish the principle. Issues of access, appearance, landscaping, layout and scale are all reserved for later approval.
One objector to the plan said he didn't want to lose the parking spot for his van. He said there is nowhere else "in the town to park a vehicle securely without worrying nothing is going to be pinched off it".
He also claimed there were bats in the area.
Other objectors were concerned about significant disturbance from dust and noise and possible damage, as well as inconvenience and danger to pedestrians.
"The old ambulance station has been at this location since 1977. It has become a landmark in the area and would be such a shame to see it go," they said.
Planning officers took the decision without reference to the planning committee because the proposed development was "considered to accord with the requirements of the council's relevant policies and no comments contrary to officer opinion have been received from the Parish Council".
A condition has been imposed so that the site is assessed for potential contamination before development commences.