Councillors threw out revised plans for a supermarket in Somerford on Thursday night, just a week after rejecting a major Morrisons scheme.
The plans for a food store in Meteor Retail Park in Somerford Road would have amalgamated two proposed retail units on the site into the main food store.
There is already existing permission for a supermarket on the site and two separate retail units.
Tom Whitehead, from Brookhouse, said after the meeting that they were "disappointed" by the decision.
Support for the revised plans came from Chris Hopkins speaking on behalf of Somerford Community Partnership, as well as ward councillor Denise Jones, and West Highcliffe ward councillor David Jones.
Chris Hopkins said: "The development will create new badly needed employment opportunities that will appeal to local residents."
Julian Schaffer, managing director of Quantum spoke against the plans referring to a previously upheld appeal for a large supermarket on the site. He urged councillors to adopt a cautionary approach.
Quantum, who have outline approval to build an Asda at Bailey Drive, last week said Asda would pull-out of the Barrack Road site if any other supermarkets were given the go-ahead.
Jim Banfi, legal advisor for Brookhouse, Meteor's developers, said the proposed scheme was considerably smaller than the previous appeal scheme and they were not asking for any additional footprint.
But supporting the proposed refusal from Cllr Lisle Smith, Cllr Claire Bath said: "If you look through the planning history of the site, it has come back to us time and time again and every time it has an increased impact on the town centre viability and the number of people who use the town centre."
Concerns over the affect of the supermarket on the town centre led to the refusal.
Cllr Smith said the benefits of the scheme - 160 jobs, £500,000 town centre fund and highway improvements - did not outweigh the potential impact to Christchurch High Street and town centre.
The decision was unanimous.