Multi-million pound plans for hundreds of homes and a supermarket in Dartford have been refused planning permission by the local government secretary.
Protesters against the plans marched through the park in 2004
The scheme, which would have meant demolishing part of Lowfield Street and building a road through Central Park, was fiercely opposed by residents.
Ruth Kelly's decision follows a public inquiry held last autumn.
Dartford council, which approved the plans, said it could not comment until it had read Ms Kelly's report in full.
Dartford MP Dr Howard Stoate, who supported the protesters, said he was delighted the application had been turned down.
"It is a vindication of the Save our Park campaign and great news for Dartford and the thousands of local residents who backed the campaign," he said.
"This was an ill-conceived and ill-judged application and the government has done the right thing by turning it down."
The borough council hoped the new shopping complex, including a Tesco superstore, along with affordable housing, would revitalise the town.
Developer St James Investments had already spent millions buying shops in the area, which are now boarded up.
The scheme would have seen a road built through Central Park
Ms Kelly agreed the plan would help regenerate Dartford and support the Thames Gateway development.
But she said the impact on the character and appearance of the historic environment, conservation area and public open space was unacceptable.
In particular, the environmental cost of the road through the park was too great.
"The council and the developer are paying the penalty for trying to railroad this application through despite the near universal opposition of the community," said Dr Stoate.
"The tragedy is that the town centre is still crying out for regeneration and we are in effect no further forward than we were three years ago when this application was first put forward."