Plans for Galgate Mill to be transformed into student apartments have been rejected by city councillors.
UK Mills Ltd of Preston had wanted to invest £3.5-4.5m on redeveloping the building into 107 student apartments, a silk weaving museum and a cafe, providing 10 full-time jobs.
The premises once housed the oldest mechanical silk mill in the world, dating back to 1792.
Galgate resident Anthony Pilling, retired chief architect with Lancashire County Council, who advises museum curators on historic textile machinery matters, spoke at Monday’s planning meeting in favour of the scheme.
He said: “This use fits within the local economy and will help support many village and city businesses.
“Failure to act now could lead to the loss of the mill.”
However, members of the council’s planning committee agreed that they would have to reluctantly refuse planning permission.
They were told by planning officers that Galgate did not have the infrastructure to cope with on-street parking for visitors to the site.
And officers said the property had not been marketed for business use.
Coun Eileen Blamire said: “On paper this is an ideal application. It’s not that we don’t like the idea but that we cannot agree with what’s being proposed.”
After the meeting, developer Ayub Hussain said: “We are sorry that significant and crucial expert opinions were dismissed and overlooked.
“However, if the planning officers wish to talk to us in order to reach a mutually acceptable agreement we would be ready to discuss.
“In the meantime we are preparing to appeal.”