The company is planning to turn the former Scandinavia Hotel in Nelson Street into more than 200 student accommodation units – 12 years after it first started working on designs for the building.
The complex will have a total of 241 student accommodation units across 35 cluster flats and 36 studio apartments.
Infill buildings in Nelson Street will be demolished to open up the Cummings Street link, connecting Chinatown to the East Village complex, Ropewalks area and Liverpool One, Downing said.
Downing's GDM Developments division has worked with Liverpool architects' firm Shedkm since 2000 on ideas for the four-storey building which dates back to the 1859.
In 2002, it lodged plans for an 80-bed boutique hotel, commercial units and apartment tower then in 2011 the site was all set to become a 180-bedroom Marriott Hotel but the plan never materialised.
Previous proposals for the site involved demolition of the majority of the building but Downing said its latest incarnation would keep as much of the existing structure and fabric as possible.
The project was given the green light by Liverpool City Council's planning committee at its meeting yesterday (9 April 2013) and it joins a burgeoning group of student accommodation developments put forward across Liverpool in recent months.
A spokesman for Downing said: "Our project in Chinatown will bring back to life an important Liverpool centre city site, creating 241 student bedrooms and retail space at ground floor.
"The market showed no interest in a hotel scheme at the same site but there is strong demand for high quality student accommodation of the type we deliver."