Newham Council is facing a legal battle with a betting shop chain for throwing out their planning application to take over a premises in Upton Park.

Members of the licensing sub-committee rejected a bid by Paddy Power in February to take over premises at 297 Green Street by being the first local authority to invoke a clause of the 2005 Gambling Act.

But Paddy Power will meet Newham Council in court to appeal the decision at Thames Magistrates Court on June 10 - and the outcome could affect future planning decisions.

A consultation by the Department for Culture, Media, and Sport proposing to change the prizes and stakes offered by gambling machines revealed that the number of B2 fixed odds betting terminals (FOBTs) has been increasing steadily since 2008 while the Recorder also revealed that £410m was spent on them in the borough last year.

In a speech yesterday, Labour leader Ed Miliband pledged to give local councils more “powers so that local people can decide, through their councils, what shops can and can’t open up.

“This will be different in local areas, local solutions to local problems.”

Mayor of Newham Sir Robin Wales backed the policy, reminding residents there are more than 80 betting shops in the borough - the third highest number in London.

He said: “[Local people] are tired of seeing their high streets filled with addictive betting machines and loan firms who very often exploit vulnerable people and push out businesses more useful to our daily lives.”

The Mayor added: “This can only end by changing the law to give local councils like Newham the powers to deal with the real problems we are facing.”