The Environment Agency had expressed concern about the impact of the scheme on the animals, which have been seen in a pond adjoining the A525 at Rhuddlan.

Local residents are campaigning against the development and objections have also been lodged by Cadw, who are concerned about the visual impact so close to the castle, and the Campaign for the Protection for Rural Wales.

Vale of Clwyd AM Ann Jones has asked the Minister for environment, sustainability and housing Jane Davidson, to call in the application, which has recently been slightly amended by the authority.

Ms Jones said: "I believe that this application is of importance to the retention of the tourist industry in Denbighshire and wider North Wales for whom tourism is still a major economic driver."

Denbighshire called in consultant ecologist Jane Walsh to survey the site and she says there have been several sightings of otters, including a female with two cubs.

In a report, she says the pond, which is surrounded by dense scrub, offers good foraging opportunities, with fish and small amphibians offering year-round feeding opportunities.

She says: "The combination of habitat connectivity with the river and ditch systems, the good scrub cover and foraging opportunities mean that the area is of significant importance for otters and also has the potential to be a breeding site."

Otters are protected under UK and European law and it is an offence not only to kill or injure them but also to damage, destroy or block access to their place of shelter.

Though no resting sites will be destroyed or damaged by the proposed road improvements on the site there will be indirect disturbance.

In view of that, says Ms Walsh, the council should apply to the Assembly Government for a licence to disturb the habitat.

She also recommends that a dry culvert be provided under the access road to enable the otters to reach the pond, that measures be taken to slow traffic down on the site to prevent casualties and that scrub planting take place to enable the habitat to continue.