Members of the Chichester and Arun Green Party said they were delighted to see plans for the A27 Arundel bypass put "back on the shelf where they belong".
Last week, the government announced that the improvements at Crossbush had been deferred until at least 2025.
In a ministerial statement, Mark Harper MP, secretary of state for transport, said the bypass scheme would be moved to the third phase of the goverment’s Road Investment Strategy, which covers 2025-30.
He added that the project faced "a range of challenges including environmental considerations and ongoing scope and design changes to ensure stakeholders’ views are fully considered".
Steve McAuliffe, who represents Arundel and Walberton on Arun District Council, said: “The past few years have been very difficult for local residents in the whole Walberton, Fontwell and Binsted area, as they have feared so much for their homes and quiet way of life.
“Now we are going to carry on campaigning to make sure the landscape and community is properly protected in case the destructive proposals are brought back in the future.
“I have worked hard to raise the profile of the wildlife and habitat damage that would be done, and I’m glad the secretary of state has highlighted the same issues.”
Debate and consultation about how best to divert traffic away from Arundel has been going on for years, with no option pleasing everyone.
The proposed grey route, which was supported in principle by West Sussex County Council, features new bridges spanning the River Arun, over the Arun Valley Railway and over Binsted Rife, as well as a new junction at Crossbush.
Under the plans, around 8km (4.9 miles) of new dual carriageway will be created to the south of the existing A27, from the Crossbush to Fontwell roundabouts.
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The Greens and others have been unable to support the grey option, calling it "divisive and unpopular".
Isabel Thurston, group leader at Arun District Council, said: “We have always opposed all bypass routes, except for the Arundel Alternative, put forward by local people that would work at a fraction of the cost.
“A green solution would also include measures such as improved public transport, safe active travel routes, smart travel measures and better management of freight.”
The Arundel Alternative proposes an uninterrupted 40mph wide single carriageway, between the Ford Road roundabout and Crossbush junction, which supporters said would avoid current pinch points and improve traffic flow, with minimal or no widening west of Ford Road roundabout.
Mrs Thurston added: “We would like to pay tribute to all the people involved in the fight against the "road to nowhere".
“While we celebrate the reprieve we have been granted, the fight will continue to protect this landscape and communities.”
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