Campaigners have won their battle to stop Sainsbury’s opening a Local store in the old Highbury Vale police station.

The town hall officially rejected the application on Thursday – just two weeks after pulling it from a planning meeting and inviting the developers to come back with a more suitable proposal.

Islington’s planning and development director Karen Sullivan said the council had been “proactive” throughout the process and suggested improvements that would have seen the project approved – but Sainsbury’s did not listen.

In the end, the plans were rejected because the store would “adversely impact the vibrancy of Finsbury Park town centre” and the proposed loading bays would cause congestion in Blackstock Road.

The news has been welcomed by neighbours who believed the store would kill off nearby independent businesses – though they are still concerned about an appeal or a fresh planning application. Their fears have only been heightened by small print in the rejection letter inviting another bid from Sainsbury’s.

More than 50 homeowners and shopkeepers joined a protest outside the Grade-II listed building in December after a “retail impact assessment” submitted by Sainsbury’s had ignored the “retail impact” on shops a stones throw away.

One of those was Arsenal Wine, whose owner Hitesh Patel led the campaign on behalf of traders.

“It’s really good news,” he said. “I was a bit surprised but I’m very happy the council has listened to us.

“I’ve been on this since the start and I’m physically tired. I’m a little bit apprehensive because there’s still people working on the building making structural changes. We’re just hoping for consistency. It’s hard to see how they can get around the first reason for refusal but if they come back in six months we need the council to be consistent.”

Former Lib Dem council leader Terry Stacy has also campaigned against the store.

He said: “It’s excellent news and a wonderful victory for a community-led campaign, but it’s a bit like a boxing match.

“We’ve won this round and we’ve now got to hope they don’t appeal or come back with a revised application.”

Christian Spurrier, another campaigner and member of Islington Green Party, said people were “cautiously optimistic” they had seen the back of the supermarket chain and urged the owners of the building to engage with community. “I know Sainsbury’s would be a reliable tenant but we just don’t need it,” he said.

A spokesman for Sainsbury’s said: “We recognise the decision made by Islington Council and are now considering our options going forward.”