The designs have been highly controversial.

The striking centrepiece was approved by councillors at a planning meeting yesterday, with work on the site set to begin as early as next year and the entire complex expected to be completed in 2020.

The hotel is considered a crucial part of the wider

success of the St James revamp in order to attract a five-star operator and top retailers to neighbouring shop units.

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But while the building itself was given the all-clear, a final decision is yet to be made over the material used to construct its trademark coiled ribbon design and flourish.

Developers want to use an eye-catching, bronze-coloured stainless steel, but planners argue this could prove “too shiny and reflective”.

A final say on the issue was delayed until a later date.

The St James revamp is set to add £25m to the city’s economy every year, with luxury brands such as Abercrombie & Fitch, 7 For All Mankind – a high-end denim shop that sells jeans for as much as £225 – and Ted Baker all expected to launch shops in the mall. Meanwhile, internationally-renowned operators of the calibre of luxury chain W and Four Seasons are understood to be interested in taking over the running of the ribbon hotel itself.

When completed, the hotel will have 210 beds topped by three levels of restaurants and bars and a public roof terrace offering panoramic views across the city.

Graham Birse, director of the Edinburgh Institute, said St James was “the most important single development” to hit the city for more than a generation – arguing key retailers would be attracted by high-spend hotel guests.

He said: “This provides Edinburgh with an opportunity to significantly increase its place in the retail league tables in the UK. Retail is having a hard time, but Edinburgh in that context has always punched below its weight.

“Edinburgh lends itself very well to the signature retailers that have been talked about in relation to this development.”

Councillor Frank Ross, economy leader, said the decision was “the final piece of the jigsaw” that would transform the east end of Princes Street and create thousands of new jobs.

And John Donnelly, chief executive of Marketing Edinburgh, said the move marked an “exciting time for the city”.

He said: “Edinburgh is in desperate need of more large five-star hotels to attract not only leisure visitors but the leading global international associations for their

conferences and events, which generate millions for the local economy.”

The controversial hotel plans were ushered through at a packed committee meeting yesterday, despite the council’s own planning officials insisting the project would “damage” the Capital’s iconic skyline – the second time councillors have rejected the advice of officials over the St James revamp.

Conservation groups argued the luxury hotel would harm Edinburgh’s status as a World Heritage Site and condemned the fact the hotel is wider in its upper levels than was originally outlined.

Adam Wilkinson, director of Edinburgh World Heritage, told councillors giving the hotel the go-ahead could eventually lead to the city losing its heritage status and suffering “severe reputational damage”.