Planning permission has been granted for around 160 new homes in Limavady, close to Enagh cemetery.
The development, proposed by McCloskey and O'Kane Building Company Ltd, had faced over 150 planning objections.
Earlier plans to develop land next to Whitehill Park were refused following strong opposition from locals.
Residents have now voiced disappointment at the latest decision.
According to McCloskey and O'Kane director Nick Brown said he recognised the sensitivity associated with the site, and that locals did not want the development in "their own back yard".
However, he estimated the building and related business could bring around £12m into the area.
"We are trying to take steps to help the local economy in Limavady which I think it needs," Mr Brown said.
"We are a local business in our fortieth year, we employ local people and will continue to do that."
(PR/BMcc)
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