Communities in Kentish Town, Gospel Oak and Dartmouth Park have hailed the Murphy's Yard developer's decision to withdraw its application as a "victory" and "good news".
Folgate Estates has withdrawn its application to build multiple high rise towers "to allow further consultation" and "revision" to its plans.
Thousands objected to the plan to build 825 homes and up to 95,000sqm of employment and other non-residential space on the site saying it would have a "highly detrimental impact on the quality of life for people in surrounding areas".
It represented a wall of eight residential towers of eight storeys or above, rising to 19 storeys, and a row of four large-floorplate industrial buildings of eight and nine storeys which would alter the panoramic views to and from Hampstead Heath.
In a statement Folgate said: "Having reviewed all consultee responses in great detail, Folgate Estates feels the best way to address concerns raised is to withdraw our planning application.
"This will allow us to undertake further consultation and make revisions to our plans.
"We remain committed to redeveloping Murphy’s Yard, bringing the whole site back into active use and opening it up to the public for the first time."
Judith Silver, who lives in Gospel Oak, said: "It's a victory, it's amazing. This gives us a chance for a new beginning.
"The constraint of Gordon House Road, and the safety and need for pedestrians and cyclists to be able to cross that road, and possibly an overhead bridge or another entrance to the rail station, that needs to be brought into the planning.
"The Gospel Oak people were only consulted at the very latest stage. The people closer to it, which is us, were not fully brought into the picture.
"They absolutely have to consult in a wider grassroots way.
"'We've got to think positively and actually put forward positive suggestions to Murphy's that they will have to take on board."
Ben Castell, of the Dartmouth Park Neighbourhood Forum said the withdrawal is good news.
"The application failed on so many grounds, I think they bowed to the inevitable as they knew it wasn't going to get through planning, it was going to get refused," he said.
"It is a sensible act and should have happened sooner."
He said he is keen that all groups should sit together and produce "proper co-designing exercises".
He added: "We can get some skills, facilitation to tease out the kind of scheme we can all get behind, one that's more responsive to the local area; the right housing mix, the right level of affordability, and one that doesn't trash protected views.
"Hopefully we can start again and do something together that has more chance of success."
John Beyer, chair of the Heath sub committee for the Heath & Hampstead Society, said "if it has gone back to developers that's a very good thing".
"There needs to be more housing in that corner and we are very happy with that, Camden needs more housing. It's the way the project has been presented, it's way out of scale for the site.
"From the mock-ups it presented a wall of buildings," he said.
"Community groups have been trying to work on a scheme with nearly as much housing but much much lower.
"It would have made a huge block on the landscape looking towards the city from the Heath both from the top of Parliament Hill and even more so from down at the Lido which would be overshadowed."
Folgate's statement added: "We remain firm in our belief that Murphy’s Yard represents the best opportunity and location to help address the pressing needs of the Kentish Town, Gospel Oak and wider communities in terms of affordable housing and new homes, workspace and employment opportunities, new community spaces, local health facilities and important infrastructure links.
"We would like to thank everyone who has taken an interest in our proposals during the past three years of public consultation and especially those who declared their support for our regeneration of Murphy’s Yard.
"We know you all want to maximise public benefits through regeneration and will consider the full range of feedback as we review the masterplan."
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