PLANS TO demolish Greenwich Market were unanimously rejected by Greenwich Council tonight in a decision which stunned both the developers and their opponents alike.

Members of the council's planning board voted to turn down the highly controversial scheme, which would have seen the existing market replaced by a modern market, a contemporary shopping precinct and a 104-bedroom hotel.

The rejection comes despite Greenwich Council planning officers recommending acceptance of the plans.

The council leader, Cllr Chris Roberts, a member of the planning board, said at the meeting: "I simply don't believe the design is good enough for the World Heritage Site. I am not convinced it would create a place I would want to spend time in."

The council's cabinet member for regeneration, Cllr Peter Brooks, also a board member, said he had "grave concerns" about the quality of the design and said: "I've not been convinced by anything I've heard" from the developers and landowners, Greenwich Hospital.

Tory councillor Dermot Poston said the scheme could be anywhere: "Those shops might be in Brazil, or Canada, or Manchester - not Greenwich."

Backbenchers from all parties said that the proposed hotel - which would be up to two storeys higher than the existing buildings - was an overdevelopment which could give rise to traffic congestion in the busy one-way system.

They echoed concerns first raised by greenwich.co.uk, which has run many articles analysing the weaknesses in the scheme.

Earlier, the Hospital's director, Martin Sands, had told the meeting that the landowner was committed to maintaining a retail mix, with small shops of the kind the market has now. He said the hotel would enhance Greenwich's economy by improving the town's shopping and allowing more tourists to stay overnight. He was backed by the South-East London Chamber of Commerce.

But, questioned by councillors, Hospital officials pointedly declined to give a clear commitment that all existing traders would be able to return after the redevelopment at rents which they could afford.

David McFarlane, the Hospital's spokesman, told the committee: "We are prepared to make some concessionary rents, but we have to have regard for the overall viability of the scheme."

The meeting, which was attended by around a hundred members of the public, also heard from several of the objectors to the scheme. Almost 900 people sent formal letters of objection to the council.

Elaine Marshall, a shopkeeper at the market since it reopened in its present form more than two decades ago, said: "There is nothing wrong with the market as it is. It is vibrant and popular - it is often impossible to get around on Sundays."

Another objector described one of the most controversial features of the design - a modern transluscent plastic roof - as "like Bluewater" and "a gift to pigeons."

Two of the three councillors representing Greenwich West, the ward which covers the market, also spoke against the plans from the audience. One, Cllr Maureen O'Mara, said: "If it ain't broke, don't fix it."

The leader of the opposition, Cllr Spencer Drury, said the proposal put before councillors was not detailed enough and did not answer critical questions such as what the proposed wooden finish on the buildings would look like and how far the new buildings would disturb famous views and sightlines.

The existing listed buildings on the street side of the market would have been kept, but the issue of how far the new buildings behind would poke up above them became a central concern at the meeting. Councillors criticised the Hospital for not providing any long-distance images of how the town centre would look.

However, the Greenwich Society spoke in favour of the proposals, saying they were an "object lesson" in how to present a planning application. The society's vice-chairman described them as "welcome" and an "improvement" to the area.

Had the plans been approved, the market would have closed at Christmas for a two-year construction process. Stallholders and a few of the shopkeepers would have been moved to a smaller temporary market on Metropolitan Open Land in the grounds of the Naval College. A separate planning application for the temporary market was withdrawn tonight.

The rejection is a serious blow to Greenwich Hospital, which has spent the last two years preparing for tonight's meeting. The Hospital engaged a professional PR firm, distributed thousands of leaflets and newsletters and enlisted those it regarded as "key stakeholders," such as the Greenwich Society and the local MP, Nick Raysnford, as cheerleaders for the scheme.

Mr Sands left the meeting tight-lipped and refused to make any comment when approached. "We will issue a press release tomorrow," he said. It is not clear what the Hospital's next move will be. It could appeal against the decision, but the council appears to be on strong ground since the scheme is in breach of more than a dozen of the policies in its Unitary Development Plan, the official statement of its planning policy.

The Hospital could return to the council in future with a revised scheme which addresses councillors' concerns about the size of the hotel and the quality of the design. But reducing the size of the hotel and improving the design may cost too much to allow the scheme to remain economic in the current climate. Whatever happens, the Hospital's hope that the scheme can be completed in time for the 2012 Olympics is now at an end.

Kate Jaconello, a trader from the market, said she and other traders felt a "huge, huge sense of relief" about the decision. "We can now get on with running our businesses without worrying about our future," she said.

UPDATED 27/08/09:

Greenwich MP, Nick Raynsford, has responded to the news:

“I am grateful to all members of the Key Stakeholders Consultative Group, stakeholders and residents who have been involved in the Hospital’s plans for the market regeneration and for the huge amount of input received from the local community.

I believe this was, and still is, the right scheme; to ensure a successful future for Greenwich town centre which preserves and enhances the market.

I intend to meet with all parties concerned, and continue to support the sensible regeneration plans which preserve and enhance the market and Greenwich town centre”