The historic US embassy in London’s Grosvenor Square will be opened to the public as part of a £1bn hotel and retail development – with Westminster City Council granting planning permission for the David Chipperfield-designed project.

Developers Qatari Diar will now transform the site, which has been home to US ambassadors to the UK since 1960, into a 137 bedroom hotel, spa and ball room for 900 guests. An operator for the site has yet to be announced.

The building was originally designed by Finnish American architect Eero Saarinen and has become a landmark, gaining grade II listed status in 2009.

Permission for the proposal has been granted subject to the building retaining its most iconic elements, including the large gilded aluminium eagle on the roof.

Approval is also dependent on the developers funding the removal of existing security fences, huts and bollards and the reopening the surrounding roads as soon as possible. Access to the areas has been restricted in recent years as part of heightened security measures. In addition, Qatari Diar have pledged to create an open, expansive green space for residents and the public.

“Today marks the start of a new era in Grosvenor Square’s rich history,” said Cllr Robert Davis, Westminster City Council deputy leader. “Everyone recognises the American embassy building and this will be an iconic hotel.

“I am pleased to rubberstamp these plans which open up the area to billions of pounds of investment and greatly improve access to the square and surrounding roads.”

Speaking earlier this year, Chipperfield said: “Our design proposals protect and respect the significant architectural and structural characteristics of Eero Saarinen’s design, with a focus on restoring and enhancing this unique building to secure its long-term future at the heart of Mayfair.”