After years of debate, Wellington's controversial Shelly Bay development has been given a crucial green light

In a marathon council meeting that went late into the night, councillors have agreed to sell and lease land the council owns so the project can proceed.

It's a major blow for mayor Andy Foster, whose mayoral campaign was partly funded by Sir Peter Jackson and Dame Fran Walsh -- fierce opponents of the development.

Foster says the development is something he's lost a lot of sleep over.

The development still faces hurdles before spades hit the ground -- with legal battles looming next year.