Five new homes are to be built on the site of a former pub car park and terrace on Highgate Hill.
They will be located next to the historic 19th-century Old Crown Inn.
The pub reopened last year as Irish-themed hostelry Brendan the Navigator, which has live music and food.
The car park on Highgate Hill was sold off by the brewery in 2020 and the pub was sold separately.
A previous application for six homes was refused earlier this year. The new scheme comprises three homes with three bedrooms and two with two bedrooms.
Developer Jonathan Ellis from Artform said the revised plan kept half of the pub terrace and is supported by the new pub management.
Islington’s planning committee heard that the pub has another outside seating area which customers can use.
The Better Archway Forum, Highgate Conservation Area Advisory Committee and the Campaign for Real Ale (CAMRA) were among 16 objectors.
Concerns include the impact of the loss of the car park on the pub’s business, design, and impact on daylight enjoyed by nearby homes.
The developers presented a report which pointed out that other urban pubs do not have parking spaces and suggested its trade would not be from motorists but from people nearby and visitors who could walk or use public transport.
The report said nine out of 70 north London pubs it looked at did not have car parks and three – the Old Bull and Bush and Spaniards Inn in Hampstead and the Five Bells in Finchley – had “significantly larger” car parks.
Residents from nearby Netherleigh Close said they fear being overshadowed by the three-storey homes and raised concerns about the look.
The design team told the planning committee they “took inspiration from the local Victorian features”.
The developers said they had looked at the light impact and it complied with guidelines. A council report said there would “not be a significant impact” of overshadowing on nearby homes.
A council planning report said one of the scheme’s benefits is the “removal of the unsightly car park”.
Councillors on the planning committee were concerned that some residents said they had not been consulted.
The developer said there had been engagement and they had responded to concerns.
Cllr Martin Klute said he felt “uncomfortable” about the loss of part of the pub’s terrace as outside space in hospitality has never been more valuable, but he noted another outdoor space remained.
The scheme was approved.