A decision to allow BMW to build a factory extension in the Green Belt has been hailed as "great news for Oxford".

Government inspector Andrew Freeman ruled that land at Horspath currently used by Rover Sports and Social Club could be developed -- but only by BMW.

He said: "Taking into account the importance of BMW's success in the future in Oxford, I am firmly of the opinion that there are exceptional circumstances."

Horspath Parish Council, the Oxford Green Belt Network and Oxford Preservation Trust had objected at the Oxford Local Plan inquiry.

They said a buffer zone of countryside was needed to prevent the "unrestricted sprawl" of Oxford and maintain the distinctiveness of Horspath village.

But the inspector said that, although BMW had no definite plans at the moment, any planning delays could make other sites abroad more attractive for the German company to invest in.

The extra space could be needed for a large new "body in white" building to produce a new derivative of the Mini or a new rail terminal for delivery of components to the factory, said the inspector.

Oxford East MP Andrew Smith said: "This is something I've been arguing for. It's great news for the thousands who work at Cowley and great news for Oxford. It opens up opportunities for the future.

"It doesn't mean indiscriminate development in the Green Belt. It does mean that any developments are looked at on their merits and it clearly reflects the sound business case that BMW has made."

The inspector's recommendations will now be put to Oxford City Council for endorsement.

Once the local plan is approved by councillors, BMW will still need to apply for detailed planning permission, but a mammoth public inquiry is unlikely to be needed.

If BMW builds on the sports field, it must find the club equivalent or improved sports pitches elsewhere.

Rodney Smithson, secretary of Rover Sports and Social Club, said: "We are still talking to BMW. At this stage our talks are con- fidential."

However, he ruled out the idea of the club moving to the site of the troubled Morris Motors Social Club inside the ring road. "That's a non-starter," he added.

BMW spokesman Alexandra Brooks said: "We are pleased the inspector has decided to recommend this. We are holding preliminary talks with the council and the sports and social club.

"The club's lease runs until November 2008 and it will not be going anywhere before then.

"It is very early days and we put in the application because the local plan runs until 2016."

Horspath Parish Council chairman Peter Walker said: "We have nothing against BMW -- we wish them every success -- but it is just one more encroachment. Horspath is a village and we want to preserve the gap between it and Oxford."

Debbie Dance, of Oxford Preservation Trust, said: "We realise the importance of BMW to Oxford, but we still think that if possible they should look inside their own site before they build outside the city."