The home in Edwards Road, Whitley Bay, is to shut after owners Continuum Care and Education Group announced they were intending to withdraw from an appeal due to be heard next month.

North Tyneside Council had refused planning permission for the premises and issued an enforcement notice to ensure the owners cease unauthorised use of the premises as a children's home.

Now Continuum Care has told the council it intends to withdraw its appeal against the decision and will move out of the three-storey terraced property which has been used to house children in care for the past two years.

They say the two remaining children currently living at the property are being rehoused with the premises being put on the market.

The enforcement notice required the operator to cease using the property as a residential care home within six months. Planning permission to change the house into a residential care home was refused in March 2007.

A council spokesman said they had never placed a child in the home and each child in the home will have a local authority care package.

He said: "We recognise that there is a continual need for residential care for children in care.

"But this terraced house in the middle of a residential street was not the right place and it was felt that its presence was detrimental to the amenity of local people," he said.