A single complaint from a neighbour has forced the closure of one of St Kilda's last bookshops.

The owners of secondhand art and literature-focused Bookhouse say they are gutted after the City of Port Phillip upheld a complaint it received last August that the shop was trading illegally in a residential zone.

Irate locals and customers of the shop in Robe Street, just off the Grey Street red light district, described the ruling as mystifying and grossly unfair.

Mayor Bernadene Voss told The Age that an "existing use rights" clause could have let trading continue – meaning the owners had to prove the premises had been used as a shop for at least 15 years, without a break longer than two years.