Multi-million pound plans to regenerate historic Crystal Palace Park were upheld by the High Court today.
Proposals for the south London site controversially include building new homes on Metropolitan open land.
The £68m scheme was opposed by the Crystal Palace Community Association (CPCA), which fears the decision could establish legal precedent threatening all public parks and open spaces throughout the United Kingdom.
CPCA members Anthony Elliott and John Payne asked the court to quash a planning permission issued by the communities and local government secretary in December 2010.
Their lawyers argued the decision was legally flawed on a number of grounds, including that the new homes would harm "bat commuting routes" across the park.
But Mr Justice Keith said all grounds of challenge, including those related to housing, failed and the outline permission granted to the London Development Agency (LDA) was valid.
The judge described how the Crystal Palace was the most distinctive feature of the Great Exhibition in Hyde Park in 1851.
After the exhibition, the structure was given a permanent home on the Penge Place Estate in Sydenham Hill in a park designed by Sir Joseph Paxton which opened in 1854.
The palace was destroyed by fire in 1936, but the park itself became regarded as "a national asset" and given a Grade II* listing in English Heritage's Register of Historic Parks and Gardens.
The judge said many of the buildings in the park, including the National Sports Centre and the Italian Terraces, were widely known.
But the condition of the park was deteriorating and, along with several of the listed buildings within it, was on the Heritage at Risk Register.
The London Development Agency (LDA) came up with a strategy to regenerate the area in three phases over a period of perhaps 20 years which became known as the "masterplan".
The judge said a major concern of a number of groups, including the CPCA, was that the scheme was "grandiose and ambitious" and unlikely to be completed.
But it had the full support of local planning authority Bromley council, the mayor of London, English Heritage, Natural England and the Garden History Society.
The objectors were anxious that some of the funding was to come from two residential developments, close to the Rockhills and Sydenham Gates respectively. The Rockhills Gate was on Metropolitan Open Land.
The judge said a planning inspector concluded that there were "very special circumstances which were sufficient to outweigh the very strong presumption against development on such land".
Dismissing the CPCA challenge, he ruled that the secretary of state had been legally entitled to agree with that conclusion.
Lawyers for the LDA had argued during the court hearing that the masterplan was the best opportunity to protect the park and the listed buildings it contained for future generations.
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