The Millwood Homes plans to build hundreds of new homes on the edge of Dartmouth have been dealt a major blow with the surprise rejection of their £80m masterplan.

The Ashburton-based developer was only weeks away from submitting a planning application for the huge West Dart development covering 66 acres of land stretching from Dartmouth Academy to Venn Lane.

The company has spent hundreds of thousands of pounds on two years of public meetings, exhibitions and consultation meetings to get to this stage.

Now South Hams Council has refused to accept the company masterplan for West Dart, claiming it controversially extends beyond the original development boundary by a massive 40 acres and does not include a new park and ride site.

Now Millwood Homes bosses are trying to arrange an emergency meeting with South Hams Council, to see what can be salvaged from the major masterplanning exercise – which is likely to take place at the end of this week or the beginning of next week.

The district council decision not to approve the Millwood masterplan was announced by the council's head of planning, economy and community Marion Playle.

She said the reasons for the decision were:

l The masterplan boundary extends beyond site D1 as allocated in the adopted DPD. This is a substantial extension by about 17 ha (42 acres), with about 11 ha (27 acres) of this being indicated for development.

l Proposal D1 is for about 405 dwellings. The masterplan identifies in total land for about 627 dwellings.

l The masterplan identifies 4.5 ha (10 acres) for employment development (as required in the DPD) but specifies that this will include the community hub (a separate requirement of the DPD). Therefore, any community facilities delivered on this land could potentially reduce the quantum of employment development proposed in the DPD.

l The masterplan makes no provision for a re-located and enhanced park and ride facility.

l The masterplan does not outline how provision of improved pedestrian and cycle access to Townstal will be facilitated.

Opponents of the massive development scheme are delighted by the district council's decision.

A Stoke Fleming-based protest group called NO2West Dart Development has been campaigning against the masterplan for the last few months – particularly the bid to build outside the original development boundary.

Spokesman David Scanlan said: 'This ruling is a testament to the power of the people of Dartmouth.

'Ninety-six per cent of people attending Millwood's last round of consultations were against the development in some form or other.'

He added: 'We now need to wait for Millwood's next step.'

And he warned: 'There are concerns that that rejection by South Hams Council to the plan may have left the door open for Millwood to force their scheme through a planning appeal.'

But Millwood Homes spokesman Mike Smith, who is part of the Millwood masterplan team declared: 'It is obviously disappointing that the masterplan has not been approved but there still may be options for us to progress the scheme and it does not follow that a planning application will not be approved.'

And he pointed to the 100 home Linden Homes' Totnes Riverside development where the masterplan was thrown out but the major scheme was controversially given the go ahead in February following a public inquiry.

He said: 'We wouldn't want to go down that route unless there was no other option but there is an option there in the background and South Hams Council should be aware of it.'

Mr Smith confirmed that Millwood had been 'very close' to submitting a planning application with the aim of starting work on the site at the end of next year.

He added: 'It is too early to say yet but we would prefer to work with South Hams than against them.'

Millwood claims it has been forced to look at developing outside the original boundary because some of the land is too difficult to develop and some belongs to a farmer who is refusing to sell.

And it claims that the South Hams Council-owned current park and ride site also cannot be developed because of a legal covenant.

It is understood Millwood was due to meet South Hams Council planners yesterday.

Dartmouth district and county councillor Jonathan Hawkins, who backed the campaign against Millwood developing the West Dart scheme outside the original development boundary, said: 'We obviously listened to the consultation and the parish councils of Stoke Fleming and Dartmouth.

'That view has been made to Millwood Homes very clearly and we wait for their reaction.'