The plans would have included housing and leisure facilities

Merthyr Village Ltd (MVL) wanted to build 2,000 homes, a shopping complex and business park in the Rhydycar area.

But the Welsh Assembly Government said it would have had adverse effects on conservation, historical sites and town centre regeneration.

Some local people had also opposed the plans on the same grounds.

In a statement, MVL's spokesman John Walters said: "We are naturally very disappointed with the outcome of the planning decision committee.

"The project would have brought significant benefits including new jobs, new homes, sporting facilities and other community facilities, and we are disappointed not to have the opportunity to be able to deliver these to the people of Merthyr."

He said that the developers were examining the content of the assembly government's decision letter and the inspector's report of the inquiry fully before making a full response to the decision.

Following the decision, local AM Huw Lewis said: "I recognise that the decision from the planning decision committee will come as a severe blow to all those connected with the development proposals.

"I have met with representatives from the Merthyr Village project on a number of occasions and I share their ambition for large-scale regeneration programmes to succeed in this area.

"It is my hope that all partners involved with the economic development of Merthyr Tydfil and Rhymney continue to explore options to improve housing and leisure facilities in the borough - I think crucially this must have a focus on town centre development."

The project was a privately funded regeneration venture that would have seen hundreds of new homes and shops built.

Developers estimated up to 2,000 jobs would have been created.

Merthyr Council had backed the plans, which were subject to public consultation and passed to the assembly government for the final decision.

But there were mixed feelings locally, including concerns over how sites of historic interest would be preserved.

In particular, campaigners had questioned how the remains of 19th Century coal mines, 18th Century iron mines, and a range of tramways and railways would be preserved.