A government department which is allowing a controversial extension of a Wolverhampton tower block to go ahead has admitted making “major errors”.

The Planning Inspectorate has apologised for the blunder which saw it overturn Wolverhampton City Council’s refusal for the work at Eagle Court, in Eagle Street, Penn Fields. Today there were demands for the Bristol-based body to pay compensation to residents who will lose natural light when the third storey of the site is built.

Councillor Mohan Passi said: “The decision on appeal to grant planning permission for an extension to Eagle Court was wrong and now it has been admitted.

“The only way to challenge the decision was by an application for judicial review by the High Court, and that had to be done within six weeks of the original decision last September.

“To rub salt into the wound, the Planning Inspectorate took eight weeks to reply and admit they were wrong.” The application was thrown out by the council in March last year and overturned on appeal in September.

In a letter Chris Pritchard, of the inspectorate’s quality assurance unit, said: “I regret to say that we are unable to defend the majority of the points of complaint. There appear to be a number of major errors in this decision, as well as a number of unevidenced assertions.”

He said the council’s decision to refuse permission based on poor design should not have been thrown out by the inspector. The inspector also referred to the wrong policies in his judgment and “understated the impact” the design would have on neighbours’ lighting.

Michael Harris, of ID Associates in Pattingham, which acted as agent for the application, said: “We were not aware of this letter from the inspectorate. The developer has the legal right to proceed.”

Dawn Gearing, who lives next door to the flats, said today she was annoyed that residents would have to suffer for a government mistake. The 40-year-old mother-of-three said: “There should be some recompense for the money we will lose when we come to sell our property.”