Real Madrid's plans to improve their Bernabeu stadium have been scuppered after the council rejected their proposal to expand the exterior of the arena.
The city council said the plans put forward by the club would have a detrimental effect on the citizens of Madrid.
The previous government had granted Madrid permission to go ahead with the upgrade but the new government has overturned that decision.
Future plans will only be given the green light if they are 'in the best interests of the general public,' the council said on Wednesday.
The La Liga club had intended on adding a hotel and a shopping centre to the stadium.
The Santiago Bernabeu currently holds 85,000 people.
Madrid are currently third in La Liga, five points off joint leaders Barcelona and Atletico Madird.
Rafa Benitez, who replaced Carlo Ancelotti as manager in the summer, is under pressure after overseeing three defeats in the last five league matches.