Glasses were raised last night in a celebratory toast as villagers marked victory in their battle against the Pennbury eco-town, in Leicestershire.

At the Rose and Crown in Thurnby, regulars gazed out of the window at the view of open countryside that would have been dug up by bulldozers to make way for the new town.

Chris and Karen Devlin were delighted by the news. Chris, 48, said: "When I heard I was chuffed to bits. Who would want to spoil something so beautiful when there are so many unused brownfield sites around the county?"

Dave Bishop, 59, was cautiously optimistic. He worries the land could still be lost to development.

He said: "There's been a lot of banter in the pub about it all and it's a good thing they're not going to build it because it would just swallow up all these villages. But I suspect it will go ahead, if not in my lifetime."

Dennis Nolan and his wife Linda were relieved. "When things aren't in your power you feel you can't do anything to stop it. We were going to lose the whole country feeling around here," said Dennis, 59.

There was also relief in other villages. In Great Glen, where cars parked along the streets proudly displayed "Down With the Eco-Town" stickers, Grant Hatherly, 41, said: "I'm just so thankful the Government said no to this because up until now nobody had seemed to listen to what we were saying."

Carol Murtagh, 54, from Stoughton, said: "If the Government had accepted the eco-town then our homes would have been really devalued."