Bell Developments wants to build halls to accommodate up to 2,300 students on a 67-acre site between Parkgate Road and Shelley Road in the town.
The development would have also included The Redgrave Institute, supported by former Olympic rower Sir Steve Redgrave. This would have housed a gym, a sports injury clinic and sports science facilities for use by students, the local community and elite athletes.
An identical application by Bell Developments was thrown out by the council back in January.
Council members agreed by 51 votes to one with the planning officers’ recommendation that the application failed to demonstrate the special circumstances crucial to permitting development in the Green Belt.
Planners ruled the scheme would obstruct views of historic buildings on the city’s skyline, describing it as "a major incursion into the open countryside which would adversely affect the rural character of the area".
The scheme generated thousands of objections including two petitions of 2,670 and 120 names respectively, and 400 letters. Only 25 letters were received in support.