A secret meeting of North Wiltshire District Council's scrutiny committee agreed the future of Goldiggers was decided properly, despite complaints that members had made a judgement without enough information.
Coun Philip Allnatt called in the decision to award a lease to developer Tribecka Land Ltd, which wants to pull down the former cinema and nightclub to make way for three shops with 24 one- and two-bedroom flats above.
He was concerned the district council's executive committee did not have enough detailed information about the various bids when it made the decision.
A panel of three Conservative members, Councillors Toby Sturgis, John Thomson and Dick Tonge, considered the call-in at a closed-doors meeting last week.
"The decision was not revised," said Coun Tonge, after the meeting.
Although the panel concluded the decision had been properly made, Coun Tonge said he was disappointed with the outcome of the bids for the future of the site.
"I am disappointed there was not more of a social aspect there is a need for less housing and more leisure facilities. A lot of drinking goes on in Chippenham because there is not much else to do.
"It is a pity we could not find something else apart from housing."
Coun Allnatt said the panel did call upon the Executive to set a time limit on the lease contract to prevent another long delay, following earlier negotiations with developer E&J Redditch Ltd, which collapsed in the summer after dragging on for almost two years.
"Coun Ruth Coleman undertook to correct that and to make sure a time limit would be set," he said.
"In view of the fact that we are having an urban capacity study I asked if we might wait till that is complete and we could see if any housing is needed, but this was not taken up," he said.
"I am pretty disgusted with the decision over Goldiggers because we are getting more and more housing. It's nonsense."
Originally the district council received 15 bids to develop the Timber Street site, from which a shortlist of five worked up bids was made.
Olney-based Tribecka created the Chicago Rock Caf in Trowbridge.
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