The hotel, proposed by Duddingston House Properties (DHP) and operated by five-star chain Rosewood, would have seen the A-listed neoclassical building converted into a luxury hotel.

The plans were recommend for refusal by council planners, though it took a single vote to formally dismiss the hotel after hours of debate on Thursday.

Jointly developed with Urbanist Hotels, the Calton Hill project has long been a bone of contention in the city.

Hoskins Architects’ designs for a 160-room development were revised down to 147 rooms after a public consultation “fundamentally altered” the initial plans. The original design was slated for being too modern and not blending into the surrounding area however new images have not allayed the fears of planning officials.

A rival plan to transform the building into a new concert hall and music school was also submitted, although this option could only have been considered once a decision was made on the hotel plan.

The suggested rejection from planners comes despite claims from developers of “overwhelming” public support for the hotel. A total of 5,000 people across 12 city wards were quizzed on the plans, the fourth such consultation to be carried out since the project began, with 93 per cent agreeing that a hotel was a suitable end-use and 92 per cent backing the proposed design.

Councillor Ian Perry, planning convener for the City of Edinburgh Council, said: “Our job is to make sure that any development in Edinburgh strikes a balance between protecting the city’s heritage and developing its economy.

“This was a very difficult decision, and not one we took any pleasure in taking, but it came down to the scale of the development, which was ultimately too great.”

Alison Johnstone, Scottish Green MSP for Lothian, who spoke at today’s planning hearing, said: “I’m so pleased that members of the planning committee were not seduced by arguments about economic benefit, instead recognising that much of our visitor economy is based on the carefully cherished landscape of our city: an inheritance which this development would have squandered.

“A perfectly feasible alternative is waiting in the wings in the shape of a new music school which much more respects the building and setting. and is more likely to widen public access. Let’s get to that quickly.”

Following the meeting, a DHP spokesman said: “We are obviously disappointed with the decision today. We put forward a proposal that matched the brief we were given, and both the planning and economic development departments of the council acknowledged the exceptional economic benefits it would deliver.

“Our contract with City of Edinburgh Council remains in place and we will now reflect on today’s outcome and consider our next steps.

“We remain committed to find a solution that ensures Edinburgh will not miss out on this once-in-a-lifetime opportunity to secure a fully-funded and sensitive restoration of this important building.”

Taco van Heusden, managing director of Urbanist Hotels – which is driving the hotel project alongside Duddingston House Properties – said: “The council cannot do anything else with the site until that contract is up - as long as there are efforts to move it on.”

The Royal High School Preservation Trust is still hoping to move progress an alternative proposal for the Thomas Hamilton building on Calton Hill by moving the city’s St Mary’s Music School in with three performances spaces and a 300-seat concert hall in the school’s former debating chamber.

Following the decision trust chairman William Gray Muir said: “The council’s decision today makes it possible for us to pursue our proposals to return the former Royal High School building to its rightful position at the cultural heart of Edinburgh with public performance spaces and a state-of-the-art new home for St Marys Music School.

“The Royal High School is an iconic building and a unique location and we are delighted that the council has acknowledged its important place in Edinburgh’s illustrious heritage.”