42 sheltered homes will be built at St Joseph's Care Home in St Helier.
The Environment Minister has given permission for the development for over-55s on St John's Road.
Consent was denied by the Planning Committee, but, on appeal, an independent inspector said it should be allowed because it supports so-called 'right-sizing' policies that free up larger homes for families.
The inspector concluded the design did not amount to overdevelopment and 'would not significantly harm the area's landscape character.
Deputy Steve Luce has agreed with the recommendation and granted permission subject to conditions and a planning obligation agreement.
"This decision reflects the importance of providing high-quality housing options for older Islanders.
"The development at St. Joseph’s Care Home will help meet a clear need for sheltered accommodation, supporting our policy of rightsizing and ensuring that people can live comfortably and independently in later life.
"It also demonstrates that, with careful design and planning, we can deliver new homes without compromising the character of our Island."
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