Controversial plans to build homes, a hotel and business park at a derelict South Downs quarry have been rejected.

Deputy Prime Minister John Prescott refused permission to build at the Upper Beeding cement works, near Steyning, following a public inquiry.

He agreed with the planning inspector, who said the proposals would damage the Sussex Downs area of outstanding natural beauty (AONB) and harm wildlife.

Mr Prescott said building at the disused cement works would be premature while the old quarry remains identified as a possible incinerator site in waste plans.

The £10 million scheme, proposed by Rustington-based developer Callstone, had been opposed by councils and environment groups.

Roy Coppard, of the Sussex branch of the Campaign to Protect Rural England, said: "We welcome the decision - it was over-development in the AONB.

"We accepted some development would be necessary to fund the demolition and clear up the site but this was more than was necessary to fund that clear-up."

Callstone proposed 84 homes, a hotel, restaurant and a business park at the 114-acre site, described by some as one of the biggest eyesores on the South Downs.

Horsham District Council and Adur District Council opposed the development, claiming there were too many houses and the scheme undermined environment policies.

Both councils supported parts of the Callstone plans and are keen to redevelop the site.

Horsham chief executive Martin Pearson said: "Clearly the council is pleased its arguments have been upheld on appeal."

Callstone director Christopher Boulter said he was "greatly encouraged" by the planning inspector's report, which was mainly critical of the proposed housing.

He said the company, which owns the site, would probably submit a fresh planning application, taking into account the inspector's recommendations.

He said it was too soon to say whether the developer would challenge Mr Prescott's decision in the courts.