Stockholm City Council has approved David Chipperfield’s controversial design for a permanent home and museum for the Nobel Foundation.

Under the proposals, a 25,000sq m (269,000sq ft) golden, cuboid facility will be constructed to house nearly all the foundation’s activities, including the Nobel prize ceremony, and to stimulate ideas and knowledge through a museum.

However, the new headquarters will be located in an inner-city Blasieholmen district surrounded by many of the Swedish capital’s oldest landmarks and museums. Two historic buildings potentially face demolition and local campaigners have lined up against the scheme.

But at a council ballot held on 25 April, the proposal passed with 54 votes for and 43 against.

Councillor Magnus Nilsson said: “I understand that it evokes much emotion and to build in the inner city is difficult, for the simple reason that we love our city. However, I think that this knowledge centre is something we should be proud of.”

Lars Heikensten, executive director of the Nobel Foundation, said: “We are pleased with this resounding yes from the political leaders in Stockholm. I am convinced that the building in itself and the activities that will take place there will be highly appreciated.”

Carl-Henrik Heldin, the foundation’s chair, added: “The public nature of the building – with its unique exhibitions, extensive activities for school children as well as meeting and lecture programmes – will be an asset for all of Stockholm and Sweden.

“Our ambition is to ensure that all children in Sweden will have an opportunity to visit the Nobel Center once during their schooling to learn about the 900 Nobel Laureates who have been rewarded over the years.”

However, a Preserve Blasieholmen Facebook group, which numbers 12,000 people campaigning to protect the historic building’s in the region, vowed to fight the development.

In a statement, they said: “The decision is disappointing but expected. However, the strength of the resistance gives us hope. Blasieholmen will be destroyed over our dead body.”

David Chipperfield and practice partner Christoph Felger were selected by a unanimous jury in April 2014 as the winners of the Nobel Center architectural competition.

Speaking about the design, Chipperfield has said: "It has a certain classical simplicity and solidity. It tries to find a balance between being solid on the one hand and transparent on the other."

The foundation’s aim is to begin construction in 2017, with completion about two years later. The budget for the project is Skr1.2bn (US$148m, €131m, £101m), mostly raised in private funding.