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In a press release Winton, the company behind the hotel and wellness centre development, confirmed the project had been granted resource consent by the Queenstown Lakes District Council.
The development will be located alongside Mill Creek, between Arrowtown and Lake Hayes.
It will also include a conference centre and restaurants.
Winton general manager Queenstown Lauren Christie said the company was looking forward to progressing with the next stages of design and planning, including final discussions with potential hotel operators.
''We are one step closer to delivering our vision for Waterfall Park, celebrating the unique natural environment that we are working hard to restore and revitalise.”
In conjunction with the proposed new access road through the neighbouring Ayrburn Farm to Waterfall Park, the riparian margins of Mill Creek will be restored along a 1.3km stretch with native shrubs and grasses.
The development was opposed by residents and the Friends of Lake Hayes Society, which argued it could negatively affect water quality in the bodies of water.
Society member Kathleen O’Sullivan told commissioners at the development's January resource consent hearing “it’s a bit of a farce” to suggest with any certainty the development will not lead to a breach of water quality standards as there was no strong scientific evidence to support that.
Queenstown architect John Blair, who lives near the planned hotel site, said it was a “disruptive and inappropriate proposal”, claiming it would cause increased traffic and a loss of visual amenity.