A government proposal to allow neighbours to object to plans by homeowners to build extensions under increased permitted development rights has been approved by MPs.

A measure in the Growth and Infrastructure Bill extends permitted development rights to allow single-storey extensions of up to eight metres. An amendment to the Bill, to require neighbour consultation on such extensions, was yesterday approved in the House of Commons by 265 votes to 221.

Last week, communities secretary Eric Pickles sent a letter to MPs outlining “a new light-touch neighbours’ consultation scheme” after the government narrowly won a Commons vote on the plans by promising to revise them.

Business minister Michael Fallon told the House that a homeowner wanting to build larger extensions would write to their local council, providing plans and a written description of the proposal. The council would then tell “adjoining neighbours”, who have 21 days to object.

If there is an objection, Fallon said, the authority, either through officers or the planning committee, would “consider whether the impact of the proposed extension on the amenity of neighbours is acceptable”.

However, MPs raised concerns about the loss of income for councils, who would have to notify neighbours but would not receive a planning fee.

Anne Main (St Albans, Con) said: “My main concern, if we are to move to the new ‘planning-lite’, is that we seem to have given additional responsibilities to councils but no additional resources.”

Ian Murray (Edinburgh South, Lab) said the new arrangements “look very much like the planning permission system”.

He said: “The only change is that, in the absence of objections from the directly adjoining properties, the development will automatically go ahead, notwithstanding any objections from other affected neighbours, or from the council, or from the wider community—and, of course, the absence of the £172 planning fee.”

Fallon said: “If the extension proceeds with no objections, the local authority will benefit from a considerable saving, because it would otherwise have had to bear the costs of a full planning application.

“However, we shall be happy to discuss with local authorities, in the normal way, whether in the fullness of time the scheme is likely to impose any additional cost on them.”

The minister said that homeowners would be able to appeal against a refusal of permission, or could then submit a full planning application. He said neighbours would not be able to appeal if permission for an extension is granted through the new process.

Fallon also said that the measures would not apply in conservation areas, and areas of outstanding natural beauty would also be exempt.

Councils and organisations including the Royal Town Planning Institute and charity Civic Voice had criticised the original plans to relax permitted development rights, arguing that it could open the floodgates to thousands of unsightly extensions and provoke disputes between neighbours.

On Monday, the House of Lords, which had also voiced opposition to the plans, voted to accept the amendment.