Communities and local government minister Ruth Kelly has rejected plans for a £300m regeneration scheme in Newham, east London

Capital & Provident’s 2.1m sq ft (195,095 sq m) Peruvian Wharf development was blocked because it did not adhere to the government’s 1997 safeguarded wharves policy, where wharves on the Thames had to be retained for industrial usage.

The decision letter issued on Tuesday stated that although the scheme would bring significant regeneration benefits to Newham, and that the safeguarding policy was often contradictory, there was no evidence that Peruvian Wharf could not be used for solely industrial purposes.

The decision also stated that the residential element of the scheme, consisting of 1,500 new homes, would be ‘inappropriate’, due to the noise and smell that the industrial element of the scheme would produce.

Commenting on the decision, Sunny Crouch, project director at Peruvian Wharf, said: ‘We are naturally disappointed by this decision and we are studying the papers in detail. We will now be considering all the issues raised by the inspector’s report and the secretary of state’s decision in detail before deciding our next steps.’