Developers want to demolish the Pilot in Station Road and create 34 new flats in a building six storeys in height.
The top floor would be set back and the side blocks tiered down to four storeys.
Access to basement parking would be from a ramp off Butts Road.
A ground floor commercial unit would be used as a cafe.
An application was unanimously approved by Adur District Council’s planning committee on Tuesday (April 6).
Stephen Chipp (Con, Southwick Green) said: “All in all I’m very much in favour of this development. I think it’s a bold statement.”
The public house closed around a decade ago and the site has been recently used as a charity shop.
Previous applications for the redevelopment of the site have been approved but no development was progressed, and these permissions have now expired.
A total of five studio, nine one-bedroom flats and 20 two-bedroom flats are proposed, with 30 per cent of the scheme to be affordable housing.
George Gunton, from JDRM Architects, said: “This application is an opportunity to set the agenda for an area in need of regeneration.”
Several councillors hoped this would provide impetus for Adur Homes to improve its housing stock surrounding the application site.
Lee Cowen (Lab, Mash Barn) said: “This proposed building is totally out of keeping with the rest of the area, which in my view is a good thing in my view and hopefully it will give the impetus to redevelop the wider area of Southwick surrounding this new building.”