Mayor of Liverpool Joe Anderson has called the Secretary of State's decision to reject the redevelopment of the Welsh Streets "a kick in the teeth" and "unacceptable, dishonourable and completely perverse".
Eric Pickles, the Secretary of State for Communities & Local Government, turned down plans for the demolition of 271 houses to make way for 154 new and 37 refurbished homes following a three-week public inquiry held last summer.
In his decision letter, Pickles said he supported arguments put forward by campaign group Save Britain's Heritage. He said: "The Secretary of State is not persuaded that the scale of demolition proposed in this case has been demonstrated to be necessary and that sufficient forms of market testing and options involving more refurbishment have been exhausted."
Anderson issued a strongly-worded statement in response to the decision on Friday and said: "This is yet another kick in the teeth for the long-suffering residents of the Welsh Streets, who have now been waiting more than a decade for new homes.
"I was prepared to abide by the decision of an independent inspector even if it had gone against us, but it is unacceptable, dishonourable and completely perverse for Eric Pickles to continue to ignore local leadership, local people and then hold and pay for an independent public inquiry using taxpayers' money, which he then ignores for naked political posturing.
"Yet again, this Government talks about localism but then interferes in the wishes of local people. It is absolutely appalling and smacks of the very worst type of political interference from Whitehall.
"We will be looking straight away at how we can challenge this dreadful decision."
The council has six weeks to decide if they will be taking the decision to a judicial review.
The proposals rejected by Pickles were the first phase of a project which would have seen the demolition of 400 properties in total, with 40 houses retained in the Welsh Streets, including the birthplace of Beatles' drummer Ringo Starr. The network of streets was initially built in the 1870s for Welsh workers moving to Liverpool.
The streets outlined for redevelopment by the council were Rhiwlas Street, Voelas Street, Kinmel Street, Admiral Street, Gwydir Street and Treborth Street.
Marcus Binney, president of campaign group Save, said: "This is a triple triumph. First for saving the streets where Ringo grew up. Second for recognising that these empty homes can be just as spacious and far outnumber the proposed replacements, and third for recognising the Welsh Streets have value as a model neighbourhood laid out by one of Liverpool's most significant builders. Our appeal to Liverpool Council is simple; let people live in these houses again. We have bought one house and made it a pleasant home. Now the others must follow."