Fears that a supermarket could take the place of an old restaurant were increased at the latest Royal Borough planning meeting.
Fresh plans from Shanly Homes to build nine apartments on the site of the Chef Peking restaurant in Ray Mead Road, Maidenhead, were refused on Wednesday.
The panel heard that the only other practical use for the site would be for retail.
David Parker, agent for Shanly, said the company was in advanced discussions with Sainsbury’s about the site, which would continue if the application was unsuccessful.
Cllr Simon Dudley (Con, Riverside) said: "We have been worried about this for quite a while.
"Shanly has said it would prefer a residential element there, but each time applications are refused it makes it more logical that it might decide to take an alternative route.
"Hopefully they will come back one last time with another proposal."
The panel rejected the proposal by seven votes to three, despite support from Ray Mead Road residents.
A poll carried out by Shanly found that 75 per cent of people in the area were in favour of the application.
Cllr Geoff Hill (Con, Oldfield), cabinet member for highways and transport and resident of Ray Mead Road, said he was 'very disappointed'.
He said: "As residents we want the apartments.
"There would be uproar here if they leased that building to Sainsbury's.
"It would be absolutely detrimental to the Riverside area."
The plans were refused because of concerns about flooding, the visual impact on the conservation area and the increased footprint of the new apartment block.
However, residents argued the new building would fit into the street scene and it would improve on the current building which is now in a state of disrepair.
Panel chairman Cllr Derek Wilson (Con, Oldfield) said residential development should be completed on the site but this proposal was difficult to approve because of its size.
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