The village's plans were praised by Prince Charles

A local trust wanted to build 32 low cost houses, a school, community and sports facilities in High Bickington.

The Department for Communities and Local Government said it conflicted with national planning policies.

The High Bickington Community Property Trust said the decision was a "major setback" for the community.

'A model'

Prince Charles held up High Bickington as a success story for the way villagers tried to deal with the shortage of affordable housing.

David Brown, chairman of the trust, said: "Residents - especially those in urgent need of affordable homes, or looking forward to a new primary school for their children - will be particularly dismayed and frustrated at this decision.

"We will need to consider the detail of the decision and take stock."

The proposals were supported by the High Bickington Parish Plan and many residents.

This is a huge disappointment and given the support for this innovative project from the community, the County and District Council, hard to understand Cllr Brian Greenslade, Devon County Council

Supporters said the plans addressed the government's renewable energy agenda and put forward a new model for creating affordable houses.

A public inquiry was held into the scheme in January after the outline planning application was called-in by the then secretary of state.

The inquiry inspector recommended refusal in his report.

The secretary of state considered that although the proposals would have preserved the character and appearance of the High Bickington Conservation Area, they conflicted with "important national policies".

Councillor Brian Greenslade, leader of Devon County Council, said they would review the decision.

"This is a huge disappointment and given the support for this innovative project from the community, the county and district councils, hard to understand."

A spokeswoman for Devon and Cornwall Housing Association, a partner in the development, said the decision would have an adverse knock-on effect on people waiting for homes in the area.

The trust planned to own and manage 17 of the affordable homes and the community facilities, and Devon and Cornwall Housing Association were due to build and manage 15 affordable homes.