Overjoyed residents gave a standing ovation and cheered the decision to reject a "dangerous" application to build 21 houses where there are now six.

The proposal for the large project opposite Wattenden Primary School in Purley, was thrown out during a meeting of the council's planning committee last Thursday – to the delight of around 30 residents in the public gallery.

The developer wanted to demolish the three houses in Old Lodge Lane, and erect five three-bedroom, six two-bedroom and 10 four-bedroom houses.

David Hooper, 62, who lives in the street said: "This really would be the most dangerous location where you could build anything like it.

"It would have been a step too far and terribly cramped had it gone ahead.

"There would have been muddy, slippery roads for about a year which would have been a real problem for children.

"With the school so nearby it would have been a lethal cocktail."

Wattenden Primary has 176 pupils and Mr Hooper believes the development would bring in another 70 children to the area.

Councillors rejected the application because of concerns over children's safety on the road and because they did not think there were enough parking spaces in the development to accommodate all the extra vehicles.

Resident Marie McLoughlin, 76, who lives nearby on the Croftleigh Estate, said: "If this had gone ahead, children would have been put at serious risk of being run over."

Residents are now thinking of alternatives to suggest to developers.

Mr Hooper said: "There are no recreational facilities for children here at all.

"It would be so much better to build a playground with a skate ramp or a BMX track to keep the kids occupied and reduce anti-social behaviour.

"We don't want to be in a position where we can say 'I told you so' after someone is hurt or even killed thanks to this plan."

Applicant The Oakwood Group has said it will appeal the council's decision.

Land/procurement director John Fleetwood said: "There is a very real issue with a lack of affordable housing.

"It's one that Croydon shares with the rest of London and the current position can only be described as dire – action is required to tackle it.

"The application has been considered with care and every aspect of it has been deemed acceptable by the planning officers – there is now no reason why it should be rejected.

"I think pressure from the locals swayed the council's decision. We're obviously very disappointed and will probably appeal soon."

It is the third time the company has applied to the council to develop the site and last time it was rejected due to a lack of parking spaces.