Nutrient neutrality complications have been blamed for the decision to cancel plans for 450 homes on the outskirts of Norwich.
A group of housing developers had hoped to build another 456 homes on the White House Farm development in Sprowston, where around 1,200 were built during phase one.
The plans for land off Atlantic Avenue had received a mixed response but bosses of Sprowston Manor, which backs on to the earmarked land, feared it would put the hotel and golf course out of business as it would make its events marquee redundant.
But now Persimmon Homes, Taylor Wimpey and Hopkins Homes say they were unable to agree on a solution with Broadland District Council due to Natural England's environmental demands for nutrient neutrality.
A spokesman for the developers said: "We can confirm that we are unable to progress our application for the proposed site at White House Farm, Sprowston.
"Unfortunately, we have been unable to agree on a suitable mitigation solution to ensure that the site achieves nutrient neutrality.”
A number of public objections had already raised concerns over what would happen to wildlife in the area, particularly a large family of nesting geese which return to the area each year.
The nutrient neutrality measure is intended to stop large quantities of nitrogen and phosphates from harming protected species in the River Wensum and the Broads.
Natural England made the intervention last year, preventing plans from progressing in locations across the country.
Land at White House Farm was adopted as part of the Norwich Growth Triangle in 2016 as part of government orders to deliver 7,000 new homes by 2026.
The pulled plans included space for shops at the Salhouse Road end as well as a play area and multi-use games area off Atlantic Avenue, with a third phase having previously been planned as a westward continuation of the phase two land.
However, play area plans had irked one couple whose home would back on to the proposed site, as they worked night shifts in the emergency services and feared they would "stand no hope of sleeping" during the day.
What is nutrient neutrality?
Nutrient neutrality is a measure introduced by Natural England to stop large quantities of nitrogen and phosphate from harming protected wildlife in the River Wensum and the Broads.
Such nutrients reduce oxygen in the water and make it harder for aquatic species to survive.
The measure has faced criticism from homebuilders and councillors who say it is stopping new housing projects from going ahead due to the costs involved.
READ MORE: Leader launches blistering attack over homes limbo
Ever since councils have been searching for a way to reduce the impact of nutrients while allowing new homes to be built.
The result is a new mitigation scheme, introduced this month, allowing housebuilders to 'offset' the impact of their developments by buying 'credits' to fund measures that will minimise the impact of the pollution.
The credit system is being launched by five Norfolk councils, in conjunction with Anglian Water.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here