Plans to create a 'supertown' in Mid Sussex have been dashed by the Government - but thousands of homes are to be built in the surrounding area.

The West Burgess Hill Company, a joint venture between Wates Homes and Sunley, wants to build 3,500 homes, primary schools and a business park.

But a report by the Government into West Sussex County Council's draft planning blueprint - which includes proposals for 46,500 more homes in West Sussex by 2016 - states plans to develop land west of Burgess Hill should be deleted.

The report says the town could not sustain such a major development.

The panel said they were "surprised at the level of support" for the proposal as "there is very little going for it" and said it would help neither Gatwick nor the coast.

Christopher Maidment of Mindthegap, who has campaigned against the proposals for the last 18 months, said: "This is an overwhelming victory, not just for Mid Sussex but also for those along the length of the Adur. We are delighted.

"If the council chooses to ignore the recommendations it should be under no illusion that the gloves will come off and we will continue the fight."

Howard Flight, the Conservative MP for Arundel and South Downs, said: "I'm very relieved. It was obvious there just wasn't the infrastructure in Burgess Hill for such a development."

Susanna Kemp, councillor for Hurstpierpoint and the Downs, where most of the houses were planned, said: "It's wonderful news. The development would have meant virtually solid housing from Hurstpierpoint to Ansty."

The county council had recommended that 500 homes be created at the site after 2011 but the report said this was also too many.

Instead, the Government recommends that 400 of them be built around Haywards Heath and the remaining 100 on small greenfield sites at villages around the county.

Tex Pemberton, county councillor for strategic environmental services, said the report only gave recommendations and the plan still had a long way to go before being approved.

He said: "The plan for 46,500 houses is still more than we want to build, but it is what the government has laid out through the regional planning guidance.

"We went to the High Court for a judicial review on that decision three years ago and lost, so our hands are tied.

"However, we will plan for that number and then monitor demand and manage the release of land. We do not believe there will be demand for that many."

The West Burgess Hill Company was not available for comment.