Following a close vote an 11-home development on the corner of London Road and St John's Road in Cosham was rejected by members of Portsmouth's planning committee on Wednesday.
Although proposals were specifically for two affordable and nine market-value homes the applicant had previously indicated discussions were underway to create an entirely affordable development.
Jeremy Heppell, speaking on behalf of the developer Cordage 3 Limited, said: 'The scheme will contribute towards meeting the housing needs of the city in a highly sustainable location.
'Given that the council has a housing supply shortage I respectfully ask you to approve this.'
It was planned the block would replace an existing five-bedroom home, known as Westmoors, and would be made up of 10 two-bedroom flats, a one-bedroom flat, 10 car parking spaces and bike storage.
But Councillor Lee Hunt disapproved of the designs, which included a flat roof. 'I think it's grim,' he said.
'It's going to be an important corner site and that design compared to the houses in London Road north is pretty hard and brutal.
'Also it doesn't meet the council's parking policy.'
Cllr Donna Jones agreed. She added: 'This is a really difficult one for me because I don't like it. I think this is a really prominent site and I completely agree with Councillor Hunt.
'Just because there is poor design on the south end of the road doesn't mean we've got to keep it.'
However, Cllr Claire Udy was concerned about losing affordable homes. She said: 'We should thank our lucky stars they are offering us two affordable homes and fulfilling their obligation to us.
'I don't particularly like the design. But if we were to ask for a pitched roof and put the costs up we are massively in danger of losing those affordable units.'
Cllr Steve Pitt commented: 'I really don't want to turn down 11 affordable homes if that's what it turned out to be.'
Cordage 3 Limited has the option of appealing the decision.
Four councillors voted to reject the application, and three voted in favour of it.