The decision comes two years after the social housing provider promised to invest millions in the complex.
WDH now say the costs of making the necessary improvements are "unaffordable".
A petition to save the site has been launched and residents are planning a protest at the site on Saturday, June 25
The residents' fight has been backed by Knottingley Liberal Democrat councillor Tom Gordon who has described the u-turn as a "slap in the face" for elderly residents.
WDH is one of the UK's largest social housing providers, with over 32,000 homes across the Wakefield District and the North of England.
In a letter to WDH, Coun Gordon said: "Knottingley is a proud town full of local people who have spent their lives here and they should at the very least have the option to grow old in the town they call home.
"We know that we have an aging population and we need long term investment in all type of accommodation, not just new family homes - which Knottingley has already seen an explosion of locally.
"WDH's proposal to bulldoze the only local independent living scheme and ship elderly residents off to alternative sites, where they will not be with their friends and where their family may not be able to travel to, is utterly callous and shows that WDH's attitude toward people growing old is one of indifference."
"Given that WDH is meant to be a socially responsible landlord I do not see how this decision - evicting residents from their hometown and the only place many of them have ever lived - is 'socially responsible'.
"The news has already distressed many of the residents and their families and will cut them off and isolate them.
"We know that social isolation and loneliness is a factor in a range of health issues such as dementia and mental health and wellbeing.
"I do not know what consideration that WDH has given to this in their decision."
Coun Gordon said any future planning application for the site would also be opposed, adding: "Given that the site is relatively small, off a side road next to a railway crossing, I can tell you now as ward councillors we will fight tooth and nail against any planning permission on this site that is not for a replacement of independent/assisted living."
There are now only seven residents at Beulah Court, with more than 25 empty units remaining.
The mother of Lynne Greaves, who has lived there for the past five years, is one of the residents to be told of the closure at a meeting with WDH.
She said: "The feelings of the residents are anger, frustrated, devastated and let down by WDH who are supposed to be a responsible, caring landlord for all social housing needs."
A WDH statement on the decision to demolish Beulah Court states: "The only way to make these works affordable would be to significantly increase rent and service charges for residents within the scheme now and in the future.
"This would then have an impact on the affordability of these properties, impacting on demand now and in the future.
"Over the last three years we have been looking at various ways to retain and improve the scheme, in line with what the remaining residents wanted.
"However, this is not possible.
"There is a higher demand for family homes in the Knottingley area which we can’t ignore.
"We are aware of a care provider in Knottingley who has recently had planning approval to build independent living accommodation close by, impacting on the future demand for this type of WDH accommodation in Knottingley.
"Beulah Court will therefore be closed, demolished and a new housing scheme will be considered on the site that meets the needs of local residents.
"We appreciate this is difficult for the tenants, their families and Knottingley residents, however we have set out our reasons for making this difficult decision and we must continue to provide the types of housing that the community of Knottingley needs.
"Our team has met with residents and is now working closely with them and their families to make sure that they are supported."