Planning officials are facing a bill of £30,000 after losing a landmark legal case over an administrative error.
The High Court has ruled Brighton and Hove City Council acted unlawfully in its decision to allow a family home to be bulldozed and replaced with luxury flats.
The planning committee approved an application in March to demolish Ruston, a £200,000 property in Withdean Avenue, Brighton.
But it should have given reasons for its decision under new laws.
The council was taken to court in a test case by Teresa Wall, who lives in a bungalow in Lions Gardens, near Ruston, and feared the flats would dwarf her home.
In a ruling that will have implications for authorities across the country, a High Court judge ordered the council to revoke planning permission and pay Ms Wall's legal costs.
The heatlh worker, whose home is owned by the Brighton Lions charity, today told of her relief.
She said: "I was horrified at the idea of living in the shadow of the development, which would have plunged my home into darkness.
"I am now very worried because if this proposal is submitted again I will be back to square one.
"However, I have been very lucky in the support I have received from Brighton Lions and my neighbours. Hopefully, if this does happen again, that support will be even greater as people realise this can happen to them."
The General Development Procedure Order was amended in December to force councillors to explain why they voted in favour of an application rather than only giving reasons for refusals.
Mr Justice Sullivan ruled on Monday the council had failed to comply with the amendment and had therefore acted unlawfully.
The court heard one member of the planning committee had been asked to "re-remember" his reasons for supporting the plans after his original explanation proved to be factually wrong.
The case has been hailed as an important victory for anyone facing the prospect of a development on their doorstep. It has also been welcomed by protesters angered by a spate of applications to demolish family homes in Brighton and Hove and replace them with blocks of flats.
One recent high-profile example was a successful application by ex-boxer Chris Eubank to demolish his home in Hove.
Solicitor Richard Buxton acted for Ms Wall at the High Court in London.
He said: "This is a great victory for her.
"But there is a much wider significance for people across the country because the law now requires councillors to give reasons for their decision to grant planning permission.
"This case has outlined the fact that the council cannot get away with not giving reasons for decisions and that is a very important victory which sets a national precedent."
Neighbours have welcomed the court ruling and hope the next committee meeting will decide in their favour and prevent the detached house being knocked down.
Richard Porter, 51, of Withdean Avenue, said: "This is a victory of 'little voice' over the faceless planning officials.
"People have become frustrated because they do not know how planning approval is arrived at. This was a test case because no one else has gone all the way to the High Court on these grounds.
"Councillors in every city and town are going to have to be much more careful and much more serious in reaching their conclusions."
The court judgment did not find malice on the part of the council, nor pass judgment about the planning application.
The judge ruled that an explanation for the decision should have been made at the meeting in March, at which councillors were split seven-four in a vote.
A council spokeswoman said: "In a case which the judge made clear was 'finely balanced' the judgment confirmed the objections to the planning application had been considered fairly and appropriately by the council.
"However, the decision was made to quash the planning decision on the basis that the reasons for granting permission for the development were not given on the planning consent.
"The council will be studying the judgment carefully and will ensure that its administrative procedures are up to date.
"The city's planning procedures are not unique and this judgment will have implications for all local planning authorities following similar practices."
The resubmitted planning application is due to be discussed by the planning committee on November 24.