Ballsbridge is Dublin’s most prestigious neighbourhood, and the postcode Dublin 4 is a byword for privilege and national shorthand for the values of its cossetted residents.

If controversial plans for a €1 billion (£680 million) scheme are approved, though, the leafy neighbourhood could make way for offices, shops and leisure facilities as part of the most ambitious redevelopment of the Irish capital in more than a century.

The proposals, to be considered by city authorities today, have triggered a furious battle among residents of Dublin. Those in favour of the redevelopment claim that it is essential to ensure the lasting prosperity of the fast-growing city. Opponents argue that it imperils the distinct character of Dublin, frequently rated as one of Europe’s most engaging capitals.

The plan is linked to the redevelopment of Lansdowne Road, the rugby ground, which has been flattened to make way for a 50,000-seat stadium that will be completed in 2009. Traditionalists are incensed that the new ground will not be known as Lansdowne, with naming rights being offered to the highest commercial bidder to raise at least €100 million.

That sum is small change compared with the figures tied up in a proposed development at the other end of Lansdowne Road. When Sean Dunne paid €379 million for a seven-acre (three-hectare) site in 2005 comprising two of Dublin’s best-known hotels, Jury’s and the Berkeley Court, it was a record sum and testimony to the seemingly relentless rise of Irish affluence.

Mr Dunne, a self-made multi-millionaire who has a home in the swankiest street in Ballsbridge, has put forward proposals for a 37-storey “cut diamond” tower at the heart of a new diplomatic quarter that would provide office space for 29 embassies as well as 536 apartments, a 232-bedroom hotel, ice-rink, cinema, upmarket shops, bars, restaurants and a “cultural quarter” with artists’ studios. In an effort to burnish his green credentials Mr Dunne proposes free electric cars to ferry residents across the city – although, as the flats will cost as much as €10 million each, it is unlikely that a taxi fare will be beyond buyers.

Construction costs will top €1 billion, but Mr Dunne’s proposals have sparked a fierce debate about Dublin’s future. After more than a decade of strong growth - much of it fuelled by the construction sector – the city has grown out of control, sprawling into the suburbs and spilling into the countryside. Living and commuting has turned, for many, into a nightmare. Until now the city has resisted a new model of high-rise living but suddenly it seems that the only way is up if Dublin wants to solve its problems.

City councillors, spurred on by the influential residents of Ballsbridge, voted to oppose Mr Dunne’s scheme even before he submitted detailed plans last week, with one arguing that it would “change forever the aesthetics of the area” by creating a mini-Manhattan. This was only the opening shot in the battle to come. City planners will begin discussing the proposals today and have two months to decide on a refusal or approval.

The Irish Times weighed in with an editorial that lamented the demolition of the hotels – landmark institutions in the city – and calling it “poignant symbolism in the sweeping away of all this by the supposedly inexorable rise of property values”. Mr Dunne was so incensed that he wrote back. His letter, at more than 1,900 words, was run in full on the newspaper’s letters page.

Mr Dunne demolished the editorial’s central theme by pointing out that even The Irish Times had climbed on the property bandwagon by selling off its central Dublin premises – itself a landmark building – and shedding 300 jobs in the process. “Change in Dublin 4 is good and necessary,” he wrote, the 1960s hotels having outlived their usefulness. “Dublin cannot compete with other international cities without providing world-class architecture and mixed-use developments that allow people to live, work and play adjacent to each other.

“Ballsbridge must recognise its obligation to contribute to the future growth and development of our city.”

Kevin Myers, a columnist with the Irish Independent, spelt out the logic of Mr Dunne’s proposals: the days of Dublin, the dear old “dirty old town”, are gone. “We cannot protect Dublin 4 merely because the influential people who live there want us to.”

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