The controversial scheme, which would have seen ten semi-detached homes built to the rear of homes in Holly Lane, was thrown out at last night's planning meeting.
The application had been heavily criticised by neighbours, who thought the development would add to overcrowding in the village.
Writing on Facebook, Karen Powell said that the recent flood of new homes - such as the 125 dwellings built at Moat House Farm - had exacerbated traffic problems.
"Has anyone tried to drive in or out of Marston Green between the hours of 5.30-8.30pm. Most nights now it's chaos."
The Holly Lane application is the latest of its kind to cause controversy in the village, which has been at the centre of the row about back garden developments.
Aware that the problem was reaching epidemic levels in large parts of the country, the Government previously promised more powers for councils to stop the practice.
Although when Local Government Secretary Eric Pickles visited the borough in 2011, he was confronted with claims that many applications were still being approved - in spite of the changes to planning rules.
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