With just over one year to go before the Windermere 10mph speed limit comes into force, the owners of one of the lake's best-known businesses have won a planning appeal to help them diversify.

English Lakes Hotels Ltd can go ahead with a multi-function building to replace its water-ski club close to the edge of the lake opposite the Low Wood Hotel.

Bosses at the hotel firm criticised the Lake District National Park Authority for turning down the plan last year, despite offering to help businesses redevelop in the run-up to the introduction of the speed limit.

They also said they had not yet given up hope that the 10mph limit would never be introduced.

English Lakes Hotels first applied for planning consent in June 2002, but the authority twice deferred discussing the plan before refusing it last summer.

The firm appealed and now Government-appointed planning inspector George Arrowsmith has decided the building can go ahead.

With a floor area of 1,000 sq metres, it will be used for exhibitions and product launches.

Director of the Low Wood Water-Ski Centre Tim Berry said: "As far as we are concerned it will be a great asset for South Lakeland as it will bring other business to the area and hopefully fill other hotels around the Lakes."

Jobs will be preserved and Mr Berry hopes that new employment will be created.

"The big problem is the time it's taken, which is really sad. The planning board (LDNPA) said they would help businesses redevelop but really that has not happened hence we had to go to appeal."

It had been very difficult, he said, to plan for the development of the hotel when the lake management plan had still not been updated. The LDNPA was consulting on a new lake management plan but was not taking into account the opinion of anyone opposed to the speed limit, which had had left him so incensed he had written to Prime Minister Tony Blair.

Mr Berry said they were not sure when they would start building work.

"We are really waiting to see what happens with the management plan for the lake and also the fact that the 10mph speed limit is still being challenged."

It was not true, he claimed, that the LDNPA could not stop the 10mph limit coming into force, as it could promote a new by-law.

The application was one of a series which the firm put in to try to deal with the consequences of the 10mph limit at the Low Wood. Permission was granted for some external hot tubs, a small conservatory, and an underpass under the A591, although an extension to the hotel for extra bedrooms was refused.

LDNPA spokesman Mick Casey said the building had been recommended for approval by officers, but turned down by members. The consultation that was going on now was to formulate a plan for the lake in a post-10mph world, and therefore comments about not wanting a speed limit were not relevant.

To halt the speed limit now would require a by-law.

"It would be crazy to think of introducing another by-law to supersede one we have not even introduced yet."

Cumbria Tourist Board chief executive Chris Collier welcomed the Low Wood's news as the county needed facilities for business tourism.