The famed Twin Peaks home designed by celebrated modernist architect Richard Neutra will not be resurrected from the ashes after all.

Nine months after ordering developer Ross Johnston to rebuild an exact replica of a 1935 Neutra-designed house that Johnston had illegally demolished, the San Francisco Planning Commission backpedaled and approved a larger two-unit structure Thursday.

Planning commissioners made it clear that they were upset about the illegal demolition of the home — known as the Largent House — at 49 Hopkins Ave. But commissioners abandoned the original “exact replica” directive due to practical and financial reasons. Namely, Johnston had sued for $10 million — a lawsuit that the city attorney’s office felt sure it would not win.

Instead, the commission approved a two-unit building that would include a 2,200-square-foot, four-bedroom house and a 1,000-square-foot granny flat. The building approved was about 600 square feet smaller than what Johnston had proposed. In addition, the commission rejected the roof deck the developer had proposed.

Though he would not comment on the details of the vote due to the pending litigation, Ryan Patterson, an attorney for the developer, suggested that Johnston was not happy with the changes the commission made.

“The project sponsor negotiated with the city agencies in good faith and at great personal expense in an effort to resolve the previously approved building permit for the site,” he said. “Based on today’s hearing, it appears the Planning Commission was not interested in resolving the matter.”

Prior to the illegal demolition, the city had approved a renovation and addition to the home, which had been altered many times over the years. Once the contractor knocked down a portion of the house that was supposed to be retained, the city rescinded that approval.

The tussle over the house made international headlines in December when the commission directed Johnston to re-create a precise replica of the airy 900-square-foot jewel box that was one of five homes Neutra designed in San Francisco.

That vote was surprising partly because the commission was asking the developer to return not to the home that had been razed but to a 1935 design that had been modified so many times that little of the original design was preserved.

While legal experts said that the city would have a hard time defending the December vote, the move was applauded by preservationists who had complained about the illegal demolition of historic homes.

Before the Thursday vote, SF Heritage Executive Director Mike Buhler submitted a letter saying that an approval of the larger Twin Peaks home would send the wrong massage to “bad actors” who seek to replace historic homes with “larger, more lucrative projects.”

Dolores Heights resident Bruce Bowen said that there are seven proposed legal demolitions in his neighborhood — all property owners who are going through the city’s arduous permitting process.

“I can’t imagine what would happen if the developers knew they could just circumvent the legal process and just bring in the bulldozers,” he said.

In his lawsuit, Johnston’s attorneys allege the city “illegally confiscated the property without just compensation.”

But in negotiating the new version of the project, planners persuaded the developer to agree to build a second unit. By cutting 600 square feet from the final plans, the size of the approved project is on par with the footprint of the house that was demolished.

Commissioner Rich Hillis said that the approved project “both meets the spirit of the code and works from a planning standpoint.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen