Campaigners have rejoiced after a developer's bid to redevelop a community pub was turned down by councillors.

Merton Council's planning committee refused the application to demolish and build flats on The Morden Tavern, in Central Road, Morden, at last night's meeting at the Civic Centre.

The pub is owned by Merton Council and leased to property development company Reef Estates, which agreed to buy the site from the council for a rumoured £1m on condition that planning permission was agreed.

David Smith, chairman of the Campaign for Morden Tavern (CMT), said he and his supporters would now draw up plans to run a co-operative pub at the site, which has been derelict for almost two years.

Mr Smith said: "We're absolutely over the moon and grateful that our elected councillors rejected the advice of planning officers to approve the site."

But despite increasing the number of affordable housing units in the scheme, as well as a pledge to provide a new smaller pub or wine bar, Reef Estates' planning application was rejected on the basis of its "out of character" design and because amenity space would be lost to housing.

Councillor Ian Munn, (Labour), said: "I don't think the pub can be rescued but we are losing a lot of green space. We are putting in large buildings in areas that were deliberately designed to be open space so that the pub as a building sits comfortably in this setting.

He added: "The materials and brutal feel of large building is too much for me to accept."

Councillor David Dean (Conservative) said: "This particular architect has arrogantly decided what is best for them and not the community."

Committee members also raised concerns about the deal itself between the council and the developer, which was investigated by the Audit Commission and the Local Government Ombudsman, both of which have cleared the council of any wrongdoing.

Stuart Deering, a director for Reef Estates, accused the CMT of being obstructive and exaggerating the number of people against the plans.

He said lots of objectors appeared to be Swindon and said that was because the petition had been handed out at a recent football match between AFC Wimbledon and Swindon Town.

Mr Deering said: "Many people who have registered an objection had no actual knowledge of our proposals.

"The only engagement I had was met with unpleasantness. I won't go any further."

Coun Simon Withey (Conservative) said: "I'm very suspicious of the motives of the council.

"The council owns the pub. After two years of neglect, what do you expect? The whole thing to me smells."

It was also revealed that a police investigation had been launched after allegations of tampering with a bat roost in the Morden Tavern.

In August, Mr Smith had published a video which apparently showed evidence of bats flying in and out of the Morden Tavern.

He told the planning committee that the council could risk being prosecuted if they gave the green light to demolish a home for an endangered species.

PC Stuart Paton, a Metropolitan Police wildlife protection officer for Merton and Wandsworth confirmed an investigation was ongoing but that no evidence of a bat roost was found.

He said: "Although I believe this planning application has been going on for some time the police were only made aware of the allegation in November which means that further surveys cannot be carried out at this time as bats are less likely to be around due to their hibernation.

"Therefore our investigation is ongoing, we are attempting to find any witnesses expert or not that can show us evidence of a bat roost ever being on this site."

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