An appeal to build 99 homes in Saltford has been thrown out by Eric Pickles.
The Secretary of State for Local Government and Communities has refused Crest Nicholson permission to build the houses on land off Manor Road.
A public enquiry was held last summer after Bath and North East Somerset Council's development control committee rejected the plans.
Government Inspector John Gray, who oversaw the enquiry, recommended the appeal be allowed but Mr Pickles did not agree claiming the housing estate would be a "significant development in the Green Belt".
A decision notice to Crest Nicholson said: "For this very reason he considers that harm from inappropriateness, and from encroachment and loss of openness, carries substantial weight against your client's proposal."
More than 400 objected to the new housing and 1,000 people signed a petition against the development.
The ruling has been welcomed by members of the Saltford Environment Group.
Chairman Phil Harding thanked everyone who had been involved in the campaign.
"We especially wish to recognise and thank the Saltford Green Belt Campaign for helping to demonstrate the residents' opposition to building on Saltford's Green Belt.
We would also like to thank local councillors from all political parties who opposed this planning application, our MP Jacob Rees-Mogg for his advice and support, B&NES Council planning department for its work relating to this enquiry, and also our parish council for its support.
"As we have reported on our website in recent weeks, we are conscious that there may be further attempts by developers to build on our Green Belt. This important decision by the Secretary of State does show that the community was right to defend Saltford's Green Belt. We hope progress on the Core Strategy can be made rapidly so that we do not face a similar situation again."
