Jubilant residents from Newton Grove, Malmesbury, say the decision by Westlea Housing Association to enlarge the play area is a victory for people power.
Westlea has agreed to extend the play park from 981sq metres to 1.200sq metres and install new play equipment.
Brian Goswell, chairman of the Newton Grove Recreation Committee, said: "It is a victory for the local people. We have got an improved play park and we did it through pressure on the various agencies."
The park is next to the former outdoor swimming pool where North Wiltshire District Council and Westlea want to build 21 homes, five of which would be low-cost.
Under the original plan, residents feared the park would have been cut by 24 per cent, depriving children of vital play space.
The residents, who were backed by North Wiltshire MP James Gray, were delighted when district councillors reversed their decision to make the play park smaller last month. But the decision still left them in limbo until a final decision could be made on the park's future.
Welcoming Westlea's decision, which involves the association investing £70,000 on new equipment, Mr Goswell said it was the result of the community working together.
He said: "We managed to achieve our aim by badgering the decision-makers, drumming up local support and word of mouth. The efforts made by everyone in our community to get people on side have been great.
"This time last year we really did not know what would happen to the play park but during the autumn we started crank up our campaign. This culminated with the visit of James Gray who gave us his full support. I think we gave Westlea and the district council a rough ride."
Mr Goswell paid tribute to the efforts of district and county councillor John Thomson, who he said acted as a catalyst for the campaign.
Although the play park appears to have been saved, Mr Goswell added the residents' fight is not over.
He said many were still concerned about the housing's association's plans to build three-storey homes on the site.
District councillor Judy Rooke, portfolio member for housing, said she was delighted there would now be low-cost housing and a play park.
Coun Rooke said: "We are really pleased with the result. The Newton Grove committee made a big stand for the open space. I think it is great the action group has worked so hard. The district council has listened to the people."
Coun Rooke added that with only £2 million of the district council budget to spend on affordable housing, Westlea's proposal would not cost the taxpayer, because the revenue made on 16 of the homes would finance five low-cost houses.
Congratulating the campaigners, Coun Thomson said the play park's enlargement was testament to their well-organised campaign.
Coun Thomson said: "I think the Newton Grove action group have kept it non-political and garnered support from the local MP to grass roots.
"They are ordinary people who have never got involved in campaigns or protests, so in this sense they are political virgins. But their victory will help people realise it is not a waste of time to take on politicians and get out and protest."
But Coun Thomson said attention had to be focused on the effect of a three-storey development on the site. He added: "We are getting a bigger play park but they are building more three-storey houses which I feel will dominate the area."
The district council will decide to whether to approve Westlea's proposal on January 6.
If planning permission is granted, Malmesbury Town Council will buy the play area for a small fee and maintain it.
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