The government has turned down a high-profile £60m regeneration project in Bridlington even though it is within the Humberside market renewal pathfinder area.
Transport secretary Alistair Darling justified his decision to reject the scheme, despite local support, on the grounds of the impact it would have on the ecology and architectural heritage of the Yorkshire seaside town.

The development would have yielded up to 312 houses, a fifth of which would have been affordable, plus leisure and retail space. The council predicted that the scheme would have created 650 jobs and brought an extra £6m in annual visitor revenue.

Councillor Brian Jefferies branded the decision a "total disaster" that condemned the town to "slow decline".

Alan Menzies, head of economic development, tourism and forward planning for East Riding Council, said: "This is extremely disappointing and a complete surprise."

Bridlington, which has 36,000 residents, is on the edge of the pathfinder and suffers from low demand, particularly from economically active groups.