ST IVES Town Council has voted in favour of a development of the woodland around the historic Treloyhan Manor so it can be sold off as 16 building plots.
The house was built by Sir Edward Hain, founder of St Ives' famous Hain shipping line, and sits in 11 acres of its own grounds.
It is now a hotel owned by The Christian Guild which provides hotels, accommodation and conferencing facilities.
The firm wants to redevelop and expand the hotel but plans to finance that with a sell-off of 16 building plots in the grounds.
Many objectors say the woodland is home to wildlife and is a key green space in St Ives.
Nearly 70 trees have been earmarked for felling as part of the planning application to Cornwall Council.
Treloyhan Manor Hotel's plans include replacing these but campaigners say the ones lost are established and mature trees that have characterised the site for more than 100 years.
At a meeting last Thursday St Ives town councillors, who were asked to comment on planning applications before they go before Cornwall Council's western area planning committee, voted to support the application.
Campaigner Rachael Levine, who has started an online petition and a Facebook page to campaign against the proposal, said: "One would have thought that if anyone would be in favour of stopping the spoliation of the St Ives area, it would be the St Ives Town Council.
"But no, the representatives of the town voted 6-3 in favour of the proposed Treloyhan Manor Hotel building project going ahead.
"We are very disappointed with the council for not protecting the green corridor from further development.
"Treloyhan Avenue used to be a beautiful area for people entering and leaving St Ives. A council decision takes a few seconds at most, but the impact of that decision and the damage done, may take nature 40 years to heal."
As well as concerns over the impact on the local environment, a number of people have raised concerns with Cornwall Council about historic Wheal Margery tin mine workings under the site that have previously led to localised subsidence.
Details of the planning application can be found on Cornwall Council's online planning portal.
The application number is PA14/00811. Comments can still be posted to Cornwall Planning Office, Dolcoath Avenue, Camborne, TR14 8SX.