A bookbinding firm has been told it cannot demolish its cramped east Oxford home.

The Green Street Bindery was refused permission to turn its factory in Green Street into student housing to fund a move to a more spacious industrial park.

The company, which employs 15 people, is the only hardback bookbinder in Oxfordshire.

Tony Tanner took over the business in 1982, when all the binding was done by hand. The company has now switched to mechanical machines which bind journals and catalogues into hardback reference books.

Delivery lorries block Green Street several times a day, while other orders are loaded in Cowley Road and transported by forklift truck. One company says it will not be able to supply manufacturing materials unless better delivery arrangements are made.

Another difficulty is that the company's turnover is limited because working hours are restricted, to avoid disturbing neighbouring residents.

Mr Tanner, who owns both the business and factory premises, said the residential location made it increasingly difficult to compete internationally. He said double shift working seemed the only way to meet demand.

Mr Tanner added: "If we vacated the premises and tried to let the factory we believe it would be very hard to attract a new tenant.

"The factory is old with an asbestos roof, high eaves that make it expensive to heat, and any manufacturing company would immediately recognise the vehicle access problem."

Oxford City Council's east area committee members said they were sympathetic, but could not justify the loss of an employment site in an area with higher than average unemployment levels.

Sophia Bartleet, ward councillor for St Clements, said: "It's not suitable for industrial use and we have a desperate housing shortage, but I'm worried about the loss of jobs in the area."

Committee chairman Bill Baker advised Mr Tanner to come up with a more suitable proposal.