Supermarket giant Tesco was dealt another planning blow yesterday when a scheme to regenerate a redundant factory site was thrown out by councillors.Plans to transform the former Campbells Meadow land in King's Lynn into a new store and business park were rejected in a shock decision by West Norfolk Council.

Supermarket giant Tesco was dealt another planning blow yesterday when a scheme to regenerate a redundant factory site was thrown out by councillors.

Plans to transform the former Campbells Meadow land in King's Lynn into a new store and business park were rejected in a shock decision by West Norfolk Council.

Meanwhile, rival Sainsbury's was given the green light to build a flagship store on nearby Scania Way, which it says will create 500 jobs for the town.

Morston Assets owns the site for the new Sainsbury's and the adjacent PinguinLutosa Foods factory. The Sainsbury's develop-ment would use part of the Pinguin land, allowing �10m to be invested in facilities at the Belgian-owned frozen food factory.

Planning officer David Parkin recommended the council's development control board (DCB) to defer its decision so that Tesco could address highway issues in its plans.

But at a special meeting yesterday, councillors approved the joint application from Sainsbury's and Morston Assets.

Councillors were told that approving both applications would have a 'significant adverse impact upon the vitality and viability of King's Lynn town centre' and the Tesco application was rejected.

In Sheringham, one of the best- known and most controversial Tesco debates has raged for more than 10 years.

Recently planners at North Norfolk District Council backed the rival Greenhouse Community Project plan to build a Waitrose on the edge of town over and above the town centre Tesco.

But the plans are currently in limbo while legal advice is sought over whether that decision can stand, while a set of complaints against several councillors involved in the debate are also being considered.

At the DCB meeting yesterday, councillor Brian Long said the most interesting decisions were always the hardest and asked if there was any way both schemes could be approved.

Councillor Michael Pitcher pointed out that there were many other Tesco stores in the area compared with Sainsbury's and he would welcome the competition.

He added that Tesco's promise of jobs and development was like an advert saying that prices could start 'from' and that there was no guarantee it would happen.

Because of the size of the development the council's decision will be referred to the government before it can finally be approved.

Peter Denolf, managing director of PinguinLutosa Foods UK said that if the scheme got final approval it would secure King's Lynn's place as Pinguin's UK headquarters, which already provides more than 500 full time and seasonal jobs.

'What we intend to do if we get the final agreement is we would like to concentrate more activity in King's Lynn including a factory expansion and an upgrade of freezing facilities. That is really looking promising for King's Lynn', he said.

Pinguin hope work on the factory will start in September when the pea harvest ends.

'We have a 150 minute type facility. To have these 150 minute peas you have to be close to the factory. Being local to the factory is very important. 'We need to be in the middle of the fields and that's where we are here', added Mr Denolf.

A �10m investment would also include a biological effluent treatment plant and new offices.

If the scheme goes ahead the Lynn factory's share of the firm's 100,000 tonne UK production would increase from 50pc to 75pc.

The decision was welcomed by the region's pea farmers who supply the Pinguin facility.

Chairman of the Aylsham Pea Growers Ed Jones said they were delighted with the news and any investment in King's Lynn was good news.

Managing director of Fen Peas, who also supply the facility said that although he believed the investment would not directly affect them it was good for the local economy in Norfolk.

Robert Oxley, Sainsbury's development executive, said they hoped to start work on the new store early next year.

He said they would be employing 500 people, building a new link road, which was also given planning approval, and they would keep their town centre shop open.

Nick Gellatly, Tesco's corporate affairs manager for the Eastern region, said: 'It is disappointing to hear that the council has turned down our planning application to regenerate the Campbell's factory site, especially following the council officers' recommendation last week that our proposals offered the best and most certain package of benefits for Lynn .

'Unfortunately this means that there is now no guarantee that the former factory site will provide the jobs and investment we had hoped it would.'

West Norfolk council are set to meet on July 12 to discuss the conditions attached to the Morston Assets and Sainsbury's application.