Salford City Council has refused planning consent for a £53m residential and leisure development at the side of the Bridgewater Canal in Worsley.
Taylor Wimpey UK and Peel Investments had applied for permission to build 600 houses alongside leisure facilities including a marina and cafe, retail units and informal green space.
A planning application was submitted for two adjoining sites in the Broadoak area of Worsley totalling almost 83 acres.
The application was refused on the basis that the council does not allow development on green land in the area, even though it does not currently have a Local Plan in place.
The scheme included 3.5 acres of "ecological mitigation" and proposed improvements to Worsley Woods, local cycle paths and the Worsley Loop Line footpath.
The proposals met with strong local opposition from a group calling itself Residents Against Inappropriate Development.
Town planning consultants Nathaniel Lichfield & Partners advised Peel and Taylor Wimpey on the scheme.
Randall Thorp are landscape architects and TTHC are advising on traffic issues.
A spokesperson for Taylor Wimpey and Peel said: "We are extremely disappointed with the decision of the Planning and Transportation Regulatory Panel to go against officers' recommendation and refuse our application for Broadoak.
"We believe that there is demand for these new homes and we have worked incredibly hard in ensuring that the plans would deliver a high quality development that would also provide wide-ranging benefits for the local community, including an exciting new marina as part of the Bridgewater Canal Masterplan.
"We will now look at the council's reasons for refusal and consider our options for the future."