WHAT now for Dibden Bay? That was the key question being posed today as campaigners continued to celebrate the government's decision to sink proposals for a huge container terminal.

The rejection of the £600m scheme has left Associated British Ports (ABP) with a huge area of redundant land - and an even bigger headache.

Bosses are stuck with a 500-acre area of reclaimed coastline that cannot now be used to provide port facilities - the very purpose for which it was created.

Wildlife campaigners say they want the internationally important site to be left alone.

But their suggestion is unlikely to find favour with ABP, which has spent millions of pounds on its abortive attempt to redevelop the area.

Selling the land for housing would enable the company to claw back at least some of the cash that has been poured into the Dibden Bay scheme.

The coastline between Hythe and Marchwood would appear to be a prime site for a luxury waterfront development similar to Hythe Marina Village.

Residents on the development celebrated well into last night after the announcement yesterday to reject the plans for the new container terminal near their homes.

Ironically among those not joining in with fellow residents was Paul Vickers - the man who spearheaded the community campaign against ABP's plans who spend yesterday in Jersey on business.

He was told the news in a telephone call from his wife Jean.

But among those enjoying a memorable victory was former Hythe Marina Association chairman Sir Anthony Gill, who said: ''I am as delighted as anybody here, because for the port to have gone ahead would have been a disaster for our lives here.

''It would have completely changed what is normally a peaceful, quiet and happy existence on this marina.''

But now having won the battle over the container terminal residents must now look to the future and what will eventually become of the site - an environmentally sensitive piece of land a third the size of Heathrow Airport.

Potential home buyers would be prepared to pay vast sums for houses on any new development on the site with the New Forest to the west and panoramic views of Southampton Water to the east.

Local estate agents say the new waterfront homes at Admiralty Quay, Marchwood, are worth about £300,000 apiece.

Plans to build 1,500 homes at Dibden Bay were put forward by ABP in the 1980s and might be revived following yesterday's decision.

However, the site is now protected by a wide range of environmental safeguards and is also part of the proposed New Forest National Park.

And any application to build homes on the land is likely to attract many of the same objections that greeted the proposed port.

Described as the last substantial stretch of open countryside next to Southampton Water, Dibden Bay is treasured by people who have seen other areas swallowed up by developers.

The loss of yet another greenfield site will top the list of objections if ABP applies to cover the site in bricks and mortar.

Hythe estate agent Jeff Shorter said: "There would be uproar if ABP applied to build housing on Dibden Bay. I think it will remain a fallow piece of land for many years to come."

That would suit members of Residents Against Dibden Bay (RADBP), which spent years fighting ABP's application to build a sixth-berth terminal.

RADBP spokesman Phil Henderson said: "We think Dibden Bay should become a recreational area where people can walk or ride horses. We'd also like to see the beach tidied up and the wildlife left to prosper.

"ABP applied for housing some years ago but the scheme was turned down. There would be even less justification for housing there now because the site is part of the proposed New Forest National Park."

Hythe and Dibden councillor Stan Wade said the land should be used for back-up grazing.

He added: "The last thing we want to see is the gap between Hythe and Marchwood close up. Once built on it would be lost forever."