Mum Eileen Price, alongside her six children and her in-laws, bought the land at Carr Gate in Wakefield 2019 after moving from Bolton, a meeting was told on Thursday.
They applied for retrospective planning permission to stay on the site, off Lawns Lane, but Covid delayed the process.
Now Wakefield Council has given them consent to stay there until 2027.
Police had strongly objected to the family remaining on the site, as they claimed to have been swamped by calls from neighbours complaining about "dangerous dogs" and quadbikes motoring around the area.
Ms Price's representative disputed those suggestions at a meeting on Thursday, however.
But objecting to the application, Niall O'Donnell from Carr Gate Community Association said: "This development has caused distress and division among this small community.
"That's alongside the significant burden placed on the authorities, including the police, the fire brigade and departments within the council."
Mr O'Donnell said the council's failure to provide alternative sites for the travelling community "shouldn't constitute special circumstances" to allow the family to stay on the land.
He described the authority's handling of the issue as "woeful" and claimed one local dog owner had had to seek medical treatment for her pup, after it had been bitten by one of the dogs at the site.
But representing the family, Mark Scatchard told the meeting: "There are no dangerous dogs - they're terriers.
"One other point I'd like to raise is that I haven't seen any quadbikes at the site either."
Mr Scatchard said the family "just want to live a normal life" and would end up on a roadside verge if evicted.
Asked why they'd not applied for permission before going onto the land, Mr Scatchard said: "It's a misunderstanding.
"It's a cultural thing that they do. They are limited in where they can go."
Council officers recommended the family be allowed to stay for a fixed period of five years, mainly because of the shortage of alternative sites and in the interests of the children involved.
The planning committee, which is made up of councillors, voted six to three in favour of allowing the family to remain.
Local Democracy Reporting Service