Public bodies have welcomed the decisions that look to have sounded the death knell for two new settlements of 13,000 homes around Cambridge.

Ruth Kelly, the transport secretary turned down an appeal from developer Stannifer to build a 5,000-home new town at Mereham, despite it raising concerns that other planned developments in the area were unlikely to result in enough homes to meet housing targets. Kelly disagreed, saying there was “no convincing evidence” that targets could not be met.

Planning consultant Andrew Bennett, acting for Stannifer, said it had not yet decided whether if would challenge the decision, which he described as “hugely disappointing”.

Retailer Tesco also announced it was withdrawing its bid for an eco-town of 8,000 homes at Hanley Grange, making it the fourth bidder to formally withdraw from the programme.

Public bodies in the Cambridge area have lined up behind plans for a new town at Northstowe, just outside Cambridge, and have opposed Mereham and Hanley Grange. Alex Plant, chief executive of housing growth body Cambridgeshire Horizons, said: “I am delighted Tesco and Ruth Kelly have listened to these concerns and withdrawn Hanley Grange and turned down the Mereham appeal. Multiplex and Tesco can still present any further proposals through the proper planning process.”