For more than 300 years, it was the industrial heart of Brick Lane in east London, a vast rat-ridden edifice in which thousands of workers brewed beer. One man, who worked there in the early 1960s, said “it looked like something out of Oliver Twist, with dark narrow streets filled with strange-looking characters and Hasidic Jews walking around in long black coats mixing with Cockney barrow boys selling their wares”.

Now, the former Truman Brewery is to become a gleaming complex of offices, shops, restaurants and a gym after the local council approved plans last week to redevelop the site, currently occupied by hundreds of small independent businesses and creative workspaces.

The decision followed a campaign of vigorous opposition to the redevelopment scheme, which was attacked as “gentrification” and a threat to the cultural heritage of the area. More than 7,000 letters of objection were submitted to Tower Hamlets council (although only 12% came from locals), compared with about 80 letters of support.

East London MP Apsana Begum warned that local businesses and people “will be driven out through rising rents” and the area’s “rich cultural vibrancy” would be “lost in the pursuit of financial gain”.

Fatima Rajina, co-founder of Nijjor Manush, a Bengali and Bangladeshi campaigning group, said it was “just the starting point” of commercial redevelopment of the area which would adversely impact “one of the poorest communities in the country”. The brewery should be converted into social housing, she told the Observer.

According to Jonathan Moberly, a resident and chair of the East End Preservation Society, the plans are a “disaster for Brick Lane. It is a corporate intervention into the heart of a fiercely independent neighbourhood with a very fragile ecosystem.” Nine out of 10 businesses were “genuinely independent – you can walk in and speak to the owner,” he added.

But Tower Hamlets council said the redevelopment proposals complied with local planning rules, and that approval was subject to ensuring affordable workspaces and independent retail space was available.

Asma Islam, a local councillor who leads on environment and planning, said: “I grew up in the area, and I understand how important Brick Lane is to the Bangladeshi community. It’s also important as a cultural hub in the capital.” But, she added, the developers were committed to retaining space for independent retailers and start-ups at affordable rents. “We want to maintain the heritage of the area, and we want the community to thrive.”

The brewery dates back to 1666, the year the Great Fire of London destroyed thousands of homes, churches and St Paul’s Cathedral. Soon it expanded over six acres, with “malt and hop lofts, stables and huge warehouses filled with vast copper vats for storing Porter, a popular black stout that brought the brewery international fame in the 18th century,” according to On Brick Lane by Rachel Lichtenstein.

The site straddled the street, with a bridge connecting the buildings and yards on either side. Iain Sinclair, who worked there in the 1970s, told Lichtenstein there was a pewter jug filled with two pints waiting for him at the start of every day. “The whole place seemed to be drunk the entire time,” he said. “Those old boys would drink their pints straight off, and then have another with their breakfast and then fall into the free bar in the afternoon … The drivers would come back with lorries full of beer and drink pints and pints of Guinness for two or three hours, before getting back into the lorries and driving off again. It seems unbelievable now.”

Roger Priddle, who joined Truman’s in 1966 as a building surveyor, said the firm operated in “a period gone by”, with dress codes, segregated canteens for management and shopfloor workers, and a company chauffeur. “Brick Lane stunk to high heaven, a strong yeasty smell from the ancient works at the brewery.”

According to John Kelly, who worked for 43 years at the brewery after starting at the age of 15, “everything was delivered by horse and cart, and the smell of the horses and the noise of their hoofs on the cobbles was constant”. Jim Tyler started as a floor sweeper in 1946 and ended up as depot supervisor. “I really loved working there. Such comradeship, free beer, we used to have such a laugh,” he told Lichtenstein.

By the 1970s, the brewery – by then owned by the Grand Metropolitan Group – was in decline, and eventually it ceased production in 1989 after 323 years. In 1995 the Zeloof Partnership bought the site. It started filling up with creative enterprises and microbusinesses: tech start-ups, vintage fashion, artists’ studios, bars.

Lichtenstein, whose Polish Jewish grandparents had a jewellery and watch repair shop in Brick Lane in the 1930s, rented a studio at the brewery in the mid-90s. “Acres of space lay empty, available for cheap rent for those willing to work on a near-derelict site without heating,” she wrote.

The artists Gilbert and George had lived in a nearby street since 1968, but the influx into the area of young British artists such as Tracey Emin, took off in the 90s. Now it is full-on hipsterville, with the streets around the brewery populated by young men with buns and beards and young women in vintage clothes, supplemented by clubbers and tourists at the weekends.

South of the brewery, the street is dominated by the Jamme Masjid, a large mosque in a building that was once a Huguenot church and later a synagogue, and now serves the local Bangladeshi community who mostly live in rundown estates in the neighbourhood. Many of the cheap curry cafes set up in the 70s to feed Bangladeshi workers have been superseded by smarter restaurants serving alcohol to people from outside the area.

The relationship between the two ends of Brick Lane is not always comfortable. It is an area that has been through countless changes of identity since early Flemish settlers brought brick kilns to the area, giving the street – then a path in open countryside – its name. They were followed in the 17th century by Huguenots, Protestant silk weavers fleeing religious persecution in France.

Later, it was the turn of Irish labourers escaping the potato famine, followed in the late 19th century by Yiddish-speaking Jewish refugees from eastern European shtetls. By the middle of the last century, a small community of people from the Sylhet district of what is now Bangladesh had been established, many finding work in the Jewish-owned tailoring businesses which they took over when their previous owners moved north to Golders Green and Finchley.

In the late 1970s it became a focus for the far-right National Front, which held anti-immigrant protests in Brick Lane every weekend, countered by the Anti-Nazi League and other anti-racist bodies.

A report, Beyond Banglatown (referring to the re-named area around Brick Lane), published by the Runnymede Trust last year, said the “future of Bengali Brick Lane looks increasingly uncertain”. It cited the hipster transformation of the northern end of the street which “is steadily encroaching south into the heart of Banglatown itself”.

Curry houses had decreased by almost two-thirds over the past 15 years, and were “interspersed with Swedish delicatessens, French patisseries, pizza parlours and vegan cafes”, the report said.

In 2007 Tower Hamlets council designated Brick Lane a tourist area with a “creative and cultural focus”. Business rentals and house prices have gone up. Hundreds of rooms and apartments are offered on Airbnb and other tourist platforms.

The Truman Brewery redevelopment is simply the latest chapter of change, said Dave Hill, the founder of OnLondon, a news and comment website about the capital. “There are legitimate anxieties about the scheme, but the debate is so reductive. The narrative is wicked property developers and a spineless local authority allowing rich people to push out poor people and obliterate their culture. Is it ever really as simple as that?

“The sublime irony is that people who have fuelled the so-called gentrification process by making the area niche and trendy are some of the ones complaining the loudest.”

But Rajina said the battle to save Brick Lane from redevelopment was not lost, and that several challenges to the council’s decision were being considered.

“People aren’t against change, but want change that will benefit them,” she said.