Voters in Middlewich have rejected a planning blueprint for the Cheshire town's development in a local referendum.
A Labour Party campaign saw the so-called neighbourhood plan defeated by 1,085 votes to 1,063.
The neighbourhood plan steering group said it was "disappointing", given four years of hard work by volunteers and councillors.
However, Labour councillor Mike Hunter said it was "a fantastic result".
Middlewich is the first town in England to reject a neighbourhood plan following the villages Swanwick Parish Council, in Derbyshire, and Thornton Parish Council, in Hull.
Councillor Hunter told the Local Democracy Reporting Service: "There were too many open-ended issues within this plan, which would have been bad for our town.
"The residents made a choice and that choice is to ensure that more of the electorate are involved in rewriting this plan."
'Political bun fight'
Under the Localism Act 2011 neighbourhood plans gave the lowest tier of local government - town and parish councils - a chance to set development blueprints.
But "no" campaigners insisted the plan was not good enough and that residents had not been consulted well enough.
Mr Hunter added: "The hard work starts now. We will be asking for residents to get involved in a new neighbourhood plan forum.
"We take no pleasure from the fact that four years and thousands of pounds have been wasted on a plan that was never fit for purpose."
The neighbourhood plan steering group said Labour had "resorted to negative campaigning" and made it "a politically motivated bun fight".
Neighbouring Knutsford residents voted overwhelmingly to approve their own plan by 1,744 votes to 349.