Double Bay residents have won their fight to stop construction of an 11- and a 14-storey apartment block, with NSW Planning Minister Kristina Keneally ruling the development "unacceptable".

In a decision announced today, Ms Keneally has refused the $350 million Ashington development on the site of the old Stamford Plaza Hotel on the grounds it would alter the village character of the exclusive harbourfront suburb and had "unacceptable overshadowing, noise and privacy impacts for local residents".

Residents and Woollahra Council had fought the proposal from Ashington, a company part-owned by the founder of Wizard Home Loans, Mark Bouris, comparing it to Surfers Paradise towers. Ms Keneally's decision supports many of their objections.

"While some community feedback related to potential view impacts, my decision was primarily based on the proposal's inconsistency with the character of the Double Bay town centre," Ms Keneally said.

While Ms Keneally has been pushing developments to create more jobs, she refused the Ashington proposal because "the benefits of the proposal would not outweigh its impact on the Double Bay area".

"The proposed towers would be intrusive on the character and built form of the town centre."

Her decision to refuse to approve the development as a state significant project will give new hope to residents fighting contentious housing developments in other parts of Sydney, especially Ku-ring-gai and the inner west, on the grounds  they are also inconsistent with the character of the area.

Ms Keneally's decision followed advice from Department of Planning, which criticised the inappropriate bulk and scale of the proposal, and advice from the NSW Government Architect who concluded the towers would have a detrimental impact on the character of the Double Bay town centre.

Former mayor of Woollahra and Ashington opponent Keri Huxley said the decision was "a terrific victory for common sense, in particular taking note of the local planning instruments and the local community".

"We couldn't have written a better refusal," she said

A spokesman for Ashington said the company was disappointed and would review the minister's decision.

Matthew Moore is the Herald's Urban Affairs Editor.