YORK'S £60 million Coppergate Riverside scheme was today thrown out by the Government.

The decision sparked ecstatic celebrations by campaigners who had fought a prolonged battle against Land Securities' plan to redevelop land for shops and apartments between Clifford's Tower and Piccadilly.

But City of York Council, which had backed the "unique and essential" proposals, warned that it was a major setback in the development of a vibrant city centre and that it would block the creation of 800 jobs.

Land Securities said it was "disappointed" by the decision, but needed time to review the reasons for refusal before commenting further.

Housing and Planning Minister Keith Hill said he agreed with the recommendations of a planning inspector who conducted a lengthy public inquiry in York last year.

He was particularly concerned about the siting of the development in relation to the listed tower, saying the scheme failed to have sufficient regard to preserving the building and its setting.

He agreed that, contrary to planning policies, the development failed to acknowledge the sensitivity of the area and would not preserve or enhance the area's historic character. The design was not of a sufficiently high quality.

It emerged that the Minister was not ruling out any development on the site. "Built development on land to the west of the River Foss is not only acceptable, but desirable in principle."

Reaction in the city today to the news was mixed.

York MP Hugh Bayley said: "Thank God the Labour Government listened to what local people were saying. York is going through an economic boom, and we must guard against over-development which can ruin the city."

A leading campaigner against the scheme, Gordon Campbell-Thomas, of the Castle Area Campaign, said: "Our members are ecstatically happy that the open area around the Tower has been retained, and that the Government has recognised the concerns of citizens, and kicked into touch Land Securities' plans to build a shopping mall facing the ancient monument.

"This proves that the City of York Council had it wrong from the start. It never really consulted the citizens of York, and has been motivated by an agenda that was not related to the needs of the people.

"Part of the city that we love and care for has been saved for generations to come."

Peter Brown, of the York Civic Trust, said it was pleasing that the Secretary of State had shared the view of so many York citizens, who believed the application would be out of character in a sensitive part of the city.

"We regret that it took an expensive and prolonged public enquiry to reach this decision. We would certainly have wished that the council of the day had taken a more enlightened stand and had put the interests of conservation before commercial expediency."

Philip Crowe, of another campaign group, York Tomorrow, said: "We are very pleased with the result. It shows that if enough people feel very strongly about an issue in local government they can make a difference to the outcome."

Another campaigner, Dave Dee, said: "I have gone goosey all over. It has been a long campaign. I cannot believe it."

Another opponent, Frank Ormston, said: "It's brilliant. My God, I cannot believe it."

Opponent John Cossham said he was surprised and delighted. "This is fantastic news for the majority of people in York. It's a victory for common sense and sustainability. I was surprised, because so many things go the way of the big money."

Roy Templeman, the council's director of environment and development, said: "We are obviously very disappointed that the plans have been rejected. We have worked closely with the developers, Land Securities, and a range of other partners, including English Heritage to bring the plans to this stage.

"With the rejection of the Coppergate Development we will have to look at

other ways of strengthening York's competitiveness within the city centre, other regional shopping centres and out-of-town developments."

Council leader Steve Galloway said: "Everybody in the city accepts that there is a need to make substantial improvements to the Piccadilly part of York. In as far as this decision will delay that, it is unfortunate. It does, however, provide us with an opportunity to look afresh at the Coppergate area."

York Tourism Bureau chief executive Gillian Cruddas said: "The majority of York Tourism Bureau members will be pleased with this news.

"Although there has always been a lot of support for developing the site, in particular Piccadilly, there were concerns from some tourism businesses. It would be just another shopping centre, when we know that the reason people come to shop in York is because of its historic environment. We need to have the right shops."

Land Securities development director Mike McGuinness said: "We are disappointed by today's decision, particularly as our application had received the overwhelming support of City of York Council's planning committee and was also supported by English Heritage - the custodians of Clifford's Tower.

"We need time to review the reasons given for refusal before commenting further."

Updated: 14:30 Wednesday, September 10, 2003