Ocado has lost the right to open a new depot in north London after the local council ruled that a planning application was misleading.
The news emerged after Labour councillors in the area welcomed the move by the authorities in Islington.
The decision could be a major setback for Ocado’s ambitions to have depots closer to shoppers to cut delivery times. Other supermarkets, such as Tesco, have also begun building urban warehouses to dispatch online orders from.
The council has withdrawn the rights to open the distribution centre next to a primary school and nursery after grassroots campaigners, many of whom are parents and call themselves "Nocado", challenged the planning application in April.
The authorities concluded that Ocado’s landlords, Telereal Trillium, provided “false and misleading evidence” and “withheld material information” to allow it to operate.
Ocado said it was disappointed by the council’s decision and it was considering all its options with the landlords.
The online supermarket added it was committed to being the “best possible occupant of the site at Tufnell Park” and “one of the greenest and quietest grocery facilities in the UK”.
The depot also neighbours a dozen or so different industrial occupiers, including a Royal Mail depot, a BT data centre, and a railway line.
The firm previously said it would only use 100pc electric vans to appease locals concerned about harmful pollution.
Labour councillors said they were “delighted the Council has made the decision to revoke the certificate of lawfulness” in a statement on Twitter.
Although a flurry of retailers have been trialling express deliveries, they still rely heavily on out-of-town warehouses to fulfil online orders. Micro sites are seen as the next obvious step in the battle for so-called last mile delivery.
A spokesperson for the council said it followed due process in investigating the matters raised by the residents before it made its decision.