Prospects for the shale gas industry in the UK have suffered a setback after county councillors voted against plans for exploratory fracking.

Energy firm Cuadrilla had wanted to frack and test the flow of gas following drilling at up to four exploration wells at a proposed site between Preston and Blackpool.

Planning officials at Lancashire County Council recommended its approval, subject to a number of conditions being met, but councillors chose to ignore the advice and rejected it due to adverse impacts on landscape and noise.

Today’s decision at County Hall, Preston, was welcomed by jubilant anti-fracking campaigners outside the building and from local residents who said they had been in “a David and Goliath battle”.

Greenpeace said the vote was “a Waterloo” for the fracking industry, while Cuadrilla said it was “disappointed” and “surprised” and would consider an appeal.

The decision on the Preston New Road site was deferred from last week as councillors wanted to review the council’s legal advice which warned that rejecting the application because of its visual and landscape impacts would be “unreasonable” in planning terms

They were further warned there was a “high risk” that a costs penalty would be imposed on the council if they lost an appeal.

But subsequent legal advice from barristers consulted by the Preston New Road Action Group and Friends Of The Earth countered that members could reasonably reject the plans and there was no serious risk of costs if an appeal was allowed.

Proposing the refusal, councillor Paul Hayhurst told members of the development committee: “I am not against fracking as such, but I do feel this is in the wrong place … let’s have good planning, let’s not just go for what Cuadrilla wants because it is the cheapest option.

“Let’s set the precedent of putting these rigs, if we have to have them, somewhere where it does not affect residents.”

Members previously said they have been under “intolerable pressure” in having the final say over the controversial process of releasing gas.

On Thursday, they voted in line with recommendations by planning officials that a second application by Cuadrilla at Roseacre, near Preston, should be turned down because it would cause an increase in traffic.

Following today’s decision, Patricia Davies, chairman of the Preston New Road Action Group, said: “This is not about gas, this is about greed. It is a case of in this country this is far too close to ordinary residents. It is an untried, an untested, self-regulating industry and it should not be anywhere near people.”

Peter Watson, who lives within 100 metres (328 ft) of the proposed site, said: “I think this shows the whole country and the senior politicians there is no social licence for fracking. It has been a real David and Goliath battle and thank God we have won.”

Speaking at County Hall, Cuadrilla’s chief executive, Francis Egan, said he did not accept that people in Lancashire had made it clear they did not want fracking in the county.

He said: “I cannot disagree more with that assertion.

“The planning officer said that 4% of the population of the Fylde objected to this application. The silent majority of people here are, I believe, in favour of this and poll after poll shows that.

“I think Lancashire is in danger of missing a huge opportunity. We have invested tens of millions, we are coming here with proposals fully backed by the council’s own officers in proposing to invest tens of millions more and the council is saying they do not want it.”

Asked how determined he was personally not to give up, he replied: “Very.”