Jubilant environment campaigners have hailed the Government decision to veto plans for a port terminal at Dibden Bay, Southampton.

But those who called for the facility to be built, including Southampton City Council and John Denham MP, were bitterly disappointed at what they saw as a major economic blow to the city and area.

Transport minister, Tom McNulty, said: "One important factor was the environmental impact of the proposals on internationally-protected sites."

He accepted the recommendation of the inspector at a public inquiry, adding that, while the Government recognised the nation's and industry's needs for additional port container capacity, every proposed development had to be justified on its own merits.

Andrew Kent, Associated British Port's Southampton director, said the decision would result in a loss of job opportunities and have an adverse effect on the local and regional economies.

The future shape of the port's development would be significantly different, Mr Kent added. But ABP would focus on growing business where there was potential: cruise ships, roll-on, roll-off traffic and bulk trade.

Another bid for a port at Dibden would not be launched, he said later.

ABP planned a 1.85km long, six-berth, deep water quay on 240 hectares. It would have taken 76 hectares of inter-tidal foreshore, some designated of international conservation importance.