Campaigners have fought the development for eight years
Campaigners say they are delighted that another round of plans to build on and around a Cardiff reservoir have been rejected by the environment minister.
In a revised planning application, Western Power Distribution (WPD) wanted to build 300 homes and a community centre on Llanishen reservoir.
Planning inspector Richard Poppleton had recommended this application but Jane Davidson over-ruled him.
When asked if they would appeal, WPD said they did not want to comment.
Campaigners are hoping Ms Davidson's decision will end their eight-year battle to prevent WPD from building on the site.
Local resident and member of the Llanishen Residents Action Group Phil Savage called for the area in the north of Cardiff to be permanently protected.
"Much still needs to be done because WPD will continue to besiege this beautiful part of north Cardiff with its cynical programme of exclusion, damage and neglect," he said.
"It is such a beautiful, open space. But if it gets built on it will be gone forever."
Mr Savage said the action group believed WPD might try to appeal against the decision and take their argument to the High Court.
But he said campaigners would continue to fight them for as long as they had to and said they were hoping the area could be designated as a nature reserve or country park.
He said: "The excellent decision of the Welsh Assembly Government's Minister for Environment, Sustainability and Housing to reject Western Power Distribution's planning appeal shows how far we have progressed in giving Welsh people power over their lives and where they live.
"In the past this issue would have been settled outside Wales by people unconcerned about the loss of such a unique environmental asset to our city."
WPD's original development plans involved reducing the 60-acre Llanishen reservoir in size, and building luxury homes on its banks.
It had also proposed preserving nearby Lisvane reservoir and creating a wetland habitat to be maintained by a wildlife trust.
But this application was rejected by Cardiff council and upheld by Ms Davidson in 2007.
The latest application comprised developing resident units, a sailing lake and clubhouse, a wetlands habitat and a community centre.
Writing on behalf of Ms Davidson, the assembly government's chief planning officer Rosemary Thomas said the the crucial issue in the appeal had been the Nant Fawr corridor which protects strategic open spaces through Cardiff.
"She has concluded that the adverse impact of the development in relation to open space issues is such that the proposal cannot be considered to be in accordance with the relevant development plan policies," said Ms Thomas in a letter.
She added the views from Lisvane reservoir, the wetlands and those of people using the lake would be affected if the plans were approved.