Controversial proposals which would have seen businesses and buildings in Stoke Newington removed to make way for new flats and a supermarket have been rejected by Hackney Council.

The decision by councillors to vote down plans for 54 flats and a large Sainsbury’s at Wilmer Place, by the corner of Church Street and Stoke Newington High Street, was greeted with jubilation by residents and activists who have been fighting the proposals over many years.

Those opposed said the development would have been ecologically detrimental to the area, which includes an adjacent nature reserve at Abney Park Cemetery, described as a “unique open space and public resource of great value”.

John Page, a Stoke Newington resident who attended the council meeting, said: “I think the council has listened to all the facts and weighed up whether or not there was a significantly adverse effect on the cemetery and whether it was a good scheme, and they’ve reached the right decision.”

“I’m really, really pleased. To see the amount of people here, it’s probably the most contentious planning application for many years and the council’s done the right thing,” added Mr Page.

Hackney Town Hall erupted with cheers and applause as the council’s planning sub-committee voted four to two against the proposals.

Central to the debate was the council’s core strategy which states: “All development should make a positive contribution to the character of Hackney’s historic and built environment.”

Another Stoke Newington resident, Dan Monck, said: “It’s a glorious decision, it’s a very, very fine decision and hopefully they’ll come back with something that offers genuine employment space rather than simply shelve-stacking space, and we’ll be very happy if they do.”

The rejection of the proposals comes after an earlier application for a larger scale development was withdrawn by the developer, Newmark Properties, in 2011.

Nick Perry, a spokesperson for the campaign group Stokey Local, said: “I think the unanimity of the community put enough doubt in [the council’s] mind that this is not something that they’re empowered or qualified to decide on.

“I’m satisfied that actually not just emotionally we won, but logically the right result came about.”

Mr Perry also submitted notes to the council’s planning sub-committee on behalf of a number of opposition groups which said: “English Heritage, Abney Park Trust and the Conservation Area Advisory Committees [CAACs] recognised the secluded nature of Abney Park and believe the development by virtue of its scale design and position, conflicts with several policies enshrined in the Stoke Newington Conservation Area Appraisal.”

The historical significance of the Abney Park site dates back to 1840 and it was designated as a local nature reserve by the council in 1993 due to its value to people and wildlife.

The Stoke Newington CAAC had said the application should be refused as it would “be seriously and substantially detrimental” to the area.

Campaigners against the proposals had highlighted other areas of concern which included noise pollution, transport issues, social housing allocation and the visual impact of the plans.