Campaigners had fought the development for five years
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An appeal by developers who wanted to build houses near two Cardiff reservoirs has been turned down by the Welsh Assembly Government.
Environmental campaigners had been fighting the plans, arguing that rare mushrooms grow at the site.
The High Court had previously ruled that the areas near Llanishen and Lisvane reservoirs should be protected.
Sustainability Minister Jane Davidson has now upheld a planning inspector decision preventing development.
An action group has been fighting for six years to prevent the development by landowner Western Power Distribution.
It wanted to reduce the 60-acre Llanishen reservoir in size, and build luxury homes on its banks.
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It is a very much loved local beauty spot and we don't feel it should be destroyed
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It has also proposed preserving nearby Lisvane reservoir and creating a wetland habitat to be maintained by a wildlife trust.
Cardiff North AM Jonathan Morgan said the decision was "great news for Llanishen, the constituency, and for the people of Cardiff".
"A huge amount of public support and professionalism has contributed to stopping this development, he said.
Ted Thurgood, chair of the Llanishen Reservoir Action Group, welcomed the latest decision, but said there was another application on appeal which they would also have to fight.
He said: "This is an inappropriate area for development.
"If you crowd the city from the motorway to the Bay with nothing else but solid development you are going to have a lot of trouble with people and their lives.
"People have loved these reservoirs for years. It is a very much loved local beauty spot and we don't feel it should be destroyed."
Rodney Berman, leader of Cardiff Council, said he was pleased the assembly government had backed the council's decision on the application.
He said: "The inspector has judged that the proposal would have caused serious harm to sites of special scientific interest around the reservoirs, as well as to the character of the Nant Fawr open space corridor of which the site forms an important part.
"He has also judged that the proposal would have resulted in a reduction of recreational sailing opportunities which would not have been adequately compensated for."
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