Communities secretary Eric Pickles has accepted Health & Safety Executive advice to turn down a planning application for two residential tower blocks in Wandsworth because of their close proximity to a gas holder station.
HSE warned it would be very difficult to evacuate people from the upper floors of the 829 proposed flats in the event of a major accident.
The application for the former Ram Brewery site was called in last year and a planning inquiry held in November.
The secretary of state's decision noted that the Minerva (Wandsworth) development would harm public safety and he was not satisfied that future occupants would be adequately protected from the safety risk.
"HSE has more than 30 years experience in giving advice to local planning authorities on planning applications for developments that are close to major hazard installations," said its director of hazardous installations Gordon MacDonald.
"We base our advice on the best available scientific evidence."
HSE provided its advice under Article 12 of the Seveso II directive and through Circular 4/00 on planning controls for hazardous substances.
But Wandsworth Borough Council cabinet member for strategic planning Ravi Govindia bemoaned the decision, which he claimed was based on an inspector's rejection of the tower's design.
He said the Minerva development would have provided £41m to improve the one-way system.
