The Department for Levelling Up, Housing and Communities has rejected a plea to call-in the application, which was given the green light by the authority’s southern planning committee last month.
It means a the committee’s decision becomes binding and a decision notice can be issued to the developer, Harworth Group, allowing work to start on-site.
The request was lodged by Shropshire resident Stephen Mulloy, who said the decision came as no surprise.
In a statement the government department said Secretary of State, Michael Gove, had considered the case and decided not to call in the application.
“The government is committed to give more power to councils and communities to make their own decisions on planning issues and believes planning decisions should be made at the local level wherever possible," the statement said.
"He is content that it should be determined by the local planning authority.”
The call-in request was made earlier this year amid criticism of the developer’s offer of just five per cent affordable housing within the scheme on grounds of viability. This was later increased to 10 per cent after the planning committee initially refused the application in August.
The council’s normal policy is for developments in the south of the county to include 20 per cent affordable housing provision.
Mr Mulloy said: “It is a sad indictment of the planning system that permits a development, with such a low level of affordable housing, without a truly independent review of the arguments submitted by the developer.
“Generally speaking, for a call-in request to be successful it has to be of ‘national significance’ and my argument was that the under-supply of affordable housing is a national issue and that this pernicious growth in viability assessments being used to reduce developers liability for affordable housing needs to be challenged by the Secretary of State."