Vancouver's Olympic Village was supposed to be a showcase for green and sustainable living, but ended up becoming a symbol for financial mismanagement for the 2010 Winter Games in February. (CBC)

Vancouver city council has approved a plan to halve the amount of social housing in the Olympic Village development.

Councillors spent hours Thursday debating how to keep an Olympic promise to provide 252 social housing units at the athletes' village, but in the end they approved a $32-million plan to rent out half of the city's units at market rates,

Under the plan, the market-rate units will be used for what the city calls essential workforce housing, targeting police officers, nurses and paramedics, and other key civic workers earning a maximum of five times the monthly rent.

The city's other 126 rental units will be reserved for low-income residents.

About 850 other units at the $1-billion development on the shores of False Creek are being sold off as condominiums at market rates.

"This is the best option for the Olympic Village, given the financial difficulties we inherited," said Mayor Gregor Robertson in a statement released after the vote.

Robertson blamed ballooning construction costs under the previous mayor for the cuts, but said abandoning the promise to provide any social housing would have hurt the city's reputation.

"Construction on the affordable housing went $46 million over budget under the last council between 2006 and 2008. The result is that we find ourselves forced to seek a compromise between social housing and market rentals."

Scaled-back housing criticized

Laura Stannard, an activist with the Citywide Housing Coalition, said the city has repeatedly scaled back its commitment to provide social housing in the 1,100-unit Olympic Village.

"The promise that was made by VANOC, and in fact even before Vancouver got the bid [for the 2010 Games], the promises that were made if we got the Olympics were for thousands of units of social housing. And then it came down to 250 and now it's down to 125."

Stannard said she doesn't consider the units that will be rented at market rates to be social housing, and said the city has an affordability crisis that needs to be addressed now.

The city was forced to take over the financing of the Olympic Village development after the original New York-based financiers pulled out of the project during the 2008 financial crisis.