Maidenhead Development Control Panel heard arguments for and against replacing the derelict building on Boyn Hill Avenue.
Cllr Claire Stretton (Con, Boyn Hill) lobbied against the previous proposal for a five-storey tower block but said most of her ward constituents back the revised plans.
She said: "The plans are not perfect, but what is? It's realistic and acceptable on a brownfield site."
Michaela Howard, of the Boyn Hill Residents Action Group, said the majority of residents are in support and Cllr Simon Dudley (Con, Riverside) concluded: "On the whole residents think that this is a sensible scheme and one that they can live with."
The homes were approved, subject to conditions.
Other decisions made at the meeting include:
* Two park-and-ride schemes for the Olympics were approved.
The temporary car parks at Stafferton Way and Braywick Park will cater for thousands of spectators who will be taken via bus to the Olympic and Paralympic rowing events at Dorney Lake. The car parks will be in use from July 27 to August 12 and again from August 31 to September 2.
* An application to build 13 three-bed houses and 21 four-bed houses, with parking and landscaping, on a former office site in Cedars Park, Cedars Road, Maidenhead was rejected.
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The Met Office has issued a yellow alert for Windsor and Maidenhead, Slough and Wokingham, warning that rain moving eastwards across the south of the country may turn to snow in some places.