Developers have won their two-year battle to turn one of Morden’s last remaining pubs into flats and shops.

Campaigners hoping to save the Morden Tavern in Central Road said they had lost a “David vs Goliath” battle in that Reef Estates will now be able to buy the Merton Council-owned building.

Councillors had rejected the developers’ redevelopment plans in January but last week the Government’s Planning Inspector overturned the decision not to grant planning permission.

David Smith, the leader of campaign group which wanted to bring back the pub as a co-operative business, said he was saddened by the decision.

He said: “The community put up a great fight to save our asset and we thought our business plan to turn the Morden Tavern into a multi-use pub and community centre was a real winner.

“We still believe the battle was worth fighting and that we should be proud of the parts we all played in this David vs Goalith battle.”

After Reef Estates bought the leasehold from the council for £190,000 in 2009, it closed down the pub and evicted its two tenants. The pub has remained empty ever since and has been broken into by squatters three times.

Merton Council’s cabinet member for regeneration, Councillor Andrew Judge, said: “This development will provide much needed housing for local people, with a design and character that has won the approval of the Planning Inspector.

“It is good that there should finally be an outcome for the site, which I hope will be considered in a positive light.”

But Richard Hilton, a Conservative councillor who helped the campaign to save the pub, said: “I do not think that this is something Andrew Judge or the council should crow about.

“He has arrogantly ignored residents views. The sale itself was also highly questionable.”