The development put forward for the land known as Damson Wood Walk in Market Drayton had sparked more than 100 objections and led residents to form a protest group to oppose the scheme.
Landowner the Healey Estate formally withdrew the planning application on Thursday. Now residents are looking at whether the land could be bought for the community.
Elliott Powell, who co-founded the campaign group when the plans were first put forward last year, said he had not stopped smiling.
He praised the efforts of all those who got behind the cause and added their voices to the mounting objections, hailing it a win for people power.
Mr Powell said: “The community has come together and we have done huge amounts of work. It’s been really hard because we don’t understand the planning system.
“We have had a tree preservation order placed on the woodland and had it listed as an asset of community value. It is so, so valuable and that’s why people spoke up.”
The plans included apartment blocks and houses along with the creation of a three-acre country park with access to the River Tern.
Objections to the application had been made on the grounds that the area is a haven for wildlife and has been used by generations of Market Drayton residents for at least 70 years.
The council’s trees team had objected to the removal of the majority of the 20-year old emerging woodland to the east and south of the site.
Mr Powell said: “This would have had a huge impact on the environment and Market Drayton has not got many green spaces left."
He said the campaign had brought together neighbours who had never spoken and fostered a greater sense of community among people who are passionate about the area.
They now want to keep the momentum going and make the treasured green space even better – including a possible bid to buy it from the landowner.
“We want to liaise with the landowners about what happens to the land now.
“We want to put benches in, enhance the walkways and make it a nature reserve. We could have a volunteer programme and we could be planting trees. We are going to put up bird boxes which have been donated by a local company.
“It’s a lovely walk but it needs investment and we want to make sure it is protected for the future.”