Local Government Secretary Eric Pickles has overruled his department’s own planning inspector by rejecting an application to build 77 houses at Park Road in Malmesbury.

Inspector John Wilde had allowed the appeal from White Lion Land following a three-day public inquiry in April after Wiltshire Council denied the developers planning permission.

But Mr Pickles has dismissed the appeal and refused planning permission as the development is not in keeping with the Malmesbury Neighbourhood Plan (MNP), which is close to being finalised after years of work by volunteers and councillors.

Although the MNP has not been assessed by the independent examiner, sufficient progress has been made that Mr Pickles has ruled the MNP needed to be given significant weight.

The plan, the first in Wiltshire to have reached this advanced stage, is having its formal inspection examination today before it is put to a local referendum.

The referendum could be held later this year to confirm issues in the town such as provision of homes along with retail, education, industrial and commercial facilities.

Wiltshire Council’s failure to demonstrate a five-year supply of land for housing in its Core Strategy meant planning permission would have been granted for homes unless any adverse impacts would significantly and demonstrably outweigh the benefit.

The decision notice stated: “The Secretary of State takes the view that releasing the appeal site for housing now could result in a significant and demonstrable adverse impact on the outcomes of both the Core Strategy and the MNP and that, when assessed against the policies in the framework taken as a whole, could run the risk of outweighing any immediate benefits provided by the appeal scheme.”

The neighbourhood plans, designed to give people more influence on development decisions affecting them, were introduced in the 2011 Localism Act that was passed by the Coalition government.