The council’s planning committee kicked out a bid to convert the empty Cabman’s Rest, in Plymouth Street, Somers Town.
A petition signed by 60 residents was submitted to the council against the plans, submitted by applicants Pike Planning.
It comes after the company’s bid to turn the venue into a 15-bed house in multiple occupation was turned down last year.
Councillor Stephen Morgan, who held a public meeting at Ladywood House to listen to people’s concerns, said: ‘We objected to these proposals as we were concerned by the density of the development; the potential increase in traffic and parking, in an area where it is already difficult to park and because we were worried about the impact the plans could have on the neighbourhood.
‘Thanks to the hard work of residents and our local action team, this planning application has sensibly been refused again.
Cllr Morgan added: ‘This is very welcome news in our community and is another example of local people power in action.’