Members of Longden Parish Council voted unanimously last night to reject plans submitted to Shropshire Council by local businessman Joe Kwaterski to demolish Spring Cottage.
The home was built by Mary Webb and her husband Henry in 1926.
But under submitted plans, it would be replaced with a six-bedroom home, housing a swimming pool, studio, cinema and orangery.
Residents last night attended the meeting, held at Longden Village Hall, to voice their concerns over the plans.
Neil Evans, chairman of the parish council, read a letter he had received from Mr Kwaterski who wished to quash rumours circulating regarding his plans for the Lyth Hill bungalow.
According to Mr Kwaterski, the house was planned solely for his own family and he has no desire to use it for commercial reasons, despite rumours to the contrary.
Mr Kwaterski also said that the original home, built by Mary Webb, had now disappeared within extensions and redevelopments carried out over the years.
But residents were unconvinced, stating that the large property was totally out of keeping with the surrounding area, would put demands on an already overstretched sewage system and could cause access and egress difficulties for neighbours while building work was carried out.
Ian Sommerville, who lives close to the bungalow, said: "A property of this size will put demands on the existing drainage system. The drains are inadequate at the moment."
Roger Evans, Shropshire councillor for the Longden ward, said the planned property would cover more than four times the area of the current property and it would breach parish and council privacy guidelines. He added: "There are geological concerns regarding the digging out of a swimming pool and cinema."
He revealed that plans to have the bungalow listed by English Heritage had failed, although further talks with Shropshire Council to have the property "spot listed" were continuing.