Wandsworth Council has voted to reject the London Springfield Hospital mega development proposals.
These would have seen 1,200 new properties developed and caused traffic and public transport chaos.
The rejection follows months of local campaigning. Nearly two-and-a-half thousand people signed Conservative candidate Mark Clarke’s petition against the controversial development.
A further 1,000 people wrote letters to Wandsworth Council objecting.
The hospital gained notoriety after a series of break-outs, including one in September 2004, when escaped paranoid schizophrenic John Barrett stabbed cyclist Dennis Finnegan to death in Richmond Park.
In November last year two men, including one facing a murder trial, absconded. One was accused of two knifepoint robberies during his week-long absence.
Thom Reilly, 38, a civil servant who lives in neighbouring Hebdon Road, said: “The development is going to swamp both Springfield Hospital as it stands and the whole community spirit we have around here.
“The developers have been completely arrogant about this and have seen no reason to consult properly with the local community. Everyone is in favour of upgrading the hospital but not in favour of putting 3,000 new residents in there.”
The Trust also planed to demolish a number of listed buildings as part of the redevelopment, as well as building on Metropolitan Open Land.
The campaign also had the backing of Labour’s Sadiq Khan, MP for Tooting, who said: “That land is the lungs of the area and I think they could be doing something better with it. These plans are awful and the developers haven’t listened to the concerns raised.”