Bill Watton had applied to the Camping and Caravanning Club to set up the certified campsite at the back of his house in Long Lane, Essington.
The long-running campaign had previous seen a planning application for three caravans, containing two gipsy households, suffer the same fate by planning chiefs who rejected the proposals.
Chairman of Essington Parish Council David Clifft said had the organisation agreed the application it could have 'opened the flood gates' for similar bids.
Mr Watton had applied for an official campsite which can take up to five caravans or motorhomes and 10 tents.
The new proposal had reignited a battle with angry residents who had fought against the original planning applications for gipsy caravans.
The impact on green belt land and increased traffic problems are among the reasons cited by those who oppose the plans.
A community meeting had been called for tonight at Wyrley Junior Football & Community Room between residents and Councillor Clifft.
But Councillor Clifft has cancelled the meeting following the Camping and Caravanning Club ruling.
He said: "The Camping and Caravanning Club have refused the application for the site at 59a Long Lane.
"I am very pleased the club have taken this action so swiftly after our campaign to stop this loophole for gipsy residential sites to be allowed after being refused planning permission by local authorities.
"I got a telephone call on Friday from the caravan club saying they had refused the application in light of publicity.
"I think had the caravan club had accepted the application it would have opened the flood gates for other applications to be accepted this way.
"It is fortunate that the parish council and other residents were on the ball and were able to see this application otherwise it could have gone under the radar.
"There doesn't seem to be fair share of sites spread across the district they tend to be in the north of the district and we have four in Essington. It's a continuous battle."
Councillor Clifft had sent out 200 letters to residents living near the proposed site informing them of Mr Watton's fresh plans.
South Staffordshire District Council's Regulatory Committee voted unanimously to throw out Mr Watton's plans last August.
Residents have been given 28 days to comment on the application prior to the Camping and Caravanning Club making its decision.
Mr Watton was unavailable for comment today.