Everyone agrees that the triangular site at the junction of College Street and Westmoreland Street is among the most pivotal in Dublin. It has been lying there, in varying degrees of disuse, for more than 20 years, since AIB - which still owns it - contemplated building its corporate headquarters there.

The site includes several important historic buildings: notably the former Scottish Widows insurance office, an elaborate red sandstone edifice in Victorian Italianate style; the one-time headquarters of the Provincial Bank of Ireland on College Street; and the 1930s neo-classical Pearl Assurance building.

A vigorous campaign was fought by An Taisce and others to prevent the Dublin developer, Treasury Holdings, developing the site as a Hilton hotel. The main argument was that it would have involved the demolition or gutting of 12 existing buildings, some of which are listed for preservation.

The conservationists also objected strongly to proposals to raise the roofline significantly, in some cases by adding three storeys in a mansard roof above parapet level, saying that this would have severely compromised an essential component of College Green, Dublin's major architectural set-piece.

They won the first round when Dublin Corporation's chief planning officer, Mr Pat McDonnell, strongly recommended that permission be refused, largely on conservation grounds.

But the City Council overruled him and approved the scheme, subject only to the top storey being omitted.

The developers and conservationists appealed to An Bord Pleanala, which held an oral hearing on the £35 million project. In December of last year the board granted permission for the scheme originally proposed, with the number of bed rooms reduced from 173 to 167 to minimise its roofline impact.

Mr Michael Smith, of An Taisce, described this decision as "a complete subversion of the listing system" and said it showed that there was "no protection for our architectural heritage in the face of economic pressure".

It was "the worst decision to have been made by the planning appeals board in years," he declared.

Mr Smith and several likeminded colleagues set up a company called Lancefort Ltd to seek a judicial review of the board's decision, arguing that it had no legal right to grant permission for a scheme which contravened the city plan and, in particular, the listing of a number of buildings on the Hilton site.

The company also set up a website on the Internet calling on people around the world to urge Hilton International to "think again" about its Dublin plans.

And when it was pressed by Treasury Holdings to provide security for legal costs, it had little difficulty in raising pledges amounting to £20,000 to sustain the case.

It is believed, however, that the costs already incurred in preliminary legal skirmishes amount to about £1 million, and that is before the substance of Lancefort's case is heard. A hearing has been scheduled for November 12th, which is expected to go ahead irrespective of Hilton's decision to pull out.

Meanwhile, the developers are said to be seeking another hotel partner to take up the torch. Even if they fail they still have one important ace up their sleeves, a 1993 planning permission to build 110,000 square feet of offices on the site, involving the demolition or gutting of the same number of historic buildings.

Mr Smith said yesterday that he believed the developers were "crying wolf" by saying that they would go ahead with the office scheme if the hotel project finally fell through. He also pointed out that the 1993 planning permission expires next May and said Lancefort might ultimately challenge this, too.

He made it clear that he would prefer a hotel, but one which worked with the grain of the existing buildings rather than the reverse.

"We will be approaching AIB to work with us to produce a first-rate conservation-oriented scheme for the site, which everyone involved would feel proud of," he declared.

One of the most unusual aspects of the present scheme is that the entire first floor of the proposed hotel, amounting to more than 30,000 square feet, would have been retained as offices by AIB. However, An Bord Pleanala rejected a recommendation that this should be omitted, enabling the height to be reduced by a full storey.

"We feel Dublin shouldn't bend over backwards in tailoring its historic city to suit multinationals like Hilton International," Mr Smith said. "We also think it's an outrage that this Luton-based company regards the College Green area as unattractive and `blighted'. But we wish them well in their search for another site."

The Green MEP Ms Patricia McKenna said Dubliners could "breathe a sigh of relief" following Hilton's decision to drop its plans.

"When you go abroad, the most frequent photographs you see of Dublin are of College Green. To build a gigantic hotel in the heart of that area would for ever alter the architectural fabric of Dublin."