The birthplace of former Beatle Ringo Starr has been saved from the bulldozer following a public campaign.
Liverpool City Council planned to demolish 9 Madryn Street as part of a housing regeneration scheme in the Dingle area of the city.
Some local residents feared their community, known as the Welsh Streets, would be torn apart and said the homes were perfect for young people and families stepping on to the property ladder.
Housing Minister Grant Shapps intervened after a group of residents wrote to him about their concerns.
He returned to Madryn Street today to unveil a deal with Liverpool's executive mayor Joe Anderson which will see around 32 properties, including Starr's former home and 15 others on Madryn Street, refurbished and put on the market.
Around 400 neighbouring properties in the Welsh Streets will still be pulled down but the council will receive around #14 million from the Government towards saving 700 decaying terraces in Anfield, in the north of the city.
Liverpool has among the largest stocks of Victorian and Edwardian terrace houses in the UK. With many now aged and neglected, decisions on whether to demolish or refurbish have proved highly divisive.
Announcing their decision outside 9 Madryn Street today, Mr Shapps and Mr Anderson were caught in angry scenes between the sides.
Some residents claimed they were being forced out while others said they were tired of waiting for the promised new homes and gardens.
Mr Shapps said: "As we've seen this afternoon, communities are at war with each other about whether this was a good idea or not.
"My view is that it's not a good idea to destroy homes, that's not what government should be about.
"Rather than destroy swathes of housing indiscriminately, we have listened to the local community.
"Today presents a real opportunity for the local community to preserve and protect these properties for the future, but I'm keen that this is just the start.
"That's why I'll be watching closely to see how the refurbishment of these 16 homes progresses, and how we can use this to prevent more homes from being demolished."
Sources differ on how long Starr lived at Madryn Street before his family moved to nearby Admiral Grove, where he was living as a teenager when the Beatles shot to fame.
Admiral Grove remains a private house while Madryn Street has been boarded up for some time and is covered in graffiti left by Beatles fans from across the world.
Mr Anderson said: "The bottom line for us is that we don't want to knock houses down for the sake of it and if we have got the money to save them we will save them.
"But the problem is that half the people want demolition and the other half want us to save the terraced houses.
"I was brought up in a terraced house, I still live in a terraced house and I love them, but as far as I'm concerned we can only save them if it is economically viable and the community want it."
The mayor said he was confident that people will want to buy the Madryn Street houses once they have been refurbished and structural damage is repaired.
Nina Edge, of the Welsh Streets residents group, said they were looking forward to seeing the detail of the plans but expressed concern that the surviving terrace will look at odds surrounded by new homes.
She said: "Half the people wanted the houses to stay and half wanted demolition so we argued that a significant number of houses should remain as a "Victorian quarter" while the rest of the land is redeveloped.
"What we have today is the council doing the bare minimum to save face because Ringo's house has caught the public's imagination.
"I wonder if these 16 houses will sit comfortably in their new surroundings and I fear it will look ridiculous.
"Better design solutions are available and I hope Mr Shapps and the council will negotiate with us to create a satisfactory urban environment."