Joe Townsend lost his legs while serving in Afghanistan
Gordon Brown has ordered a council which told a disabled soldier he could not build a specially-adapted home on his grandparents' land to reconsider.
Wealden council had said the planned building in Pevensey, for Royal Marine Joe Townsend, 20, who lost his legs in Afghanistan, would be "intrusive".
But Downing Street said the "country owes Joe huge gratitude" and said the authority must "do the right thing".
The Sussex council said it had told the government it hoped to find a solution.
A statement issued by the Prime Minister's office said: "The whole country owes Joe huge gratitude for the sacrifice he has made for our country, and it is unacceptable that he is being stopped from having the home of his choice.
"Wealden District Council must do the right thing immediately and reconsider this case."
A spokesman for Wealden council said: "We have already informed the Downing Street press office we are working with the planning agent and representatives of the family and are optimistic of finding an appropriate solution for meeting Joe's housing needs.
"In deference to any proposals that may come forward from the family it would be inappropriate to say any more, but we remain hopeful that we will be able to agree a solution."
Mr Townsend, who lost one leg completely and one to the knee, when he stepped on a landmine, has had several operations and rehabilitation at Headley Court in Surrey.
The council's planning committee voted by a slim majority to reject the planned building, incorporating a bathroom and carers' room, on land at his grandparents' home in Hankham Hall Road.
Mr Townsend's grandfather David Carter, 72, who submitted the application to finance and build the single-storey building, said his grandson was "absolutely devastated" by the decision.