Concerns of increased traffic and overdevelopment meant that plans to build 41 flats on the site of Brewin Oaks were refused by planners - despite suggestions it could be converted into a nursing home.
Councillors on the planning committee at Fenland District Council (FDC) said that "the people of March needed to be heard" after 79 objections were submitted against the build.
But planning chiefs argued there was "insufficient justification" despite "significant issues" being raised.
Agent Ted Brand said that the outline plans were "not fixed" and could see the home of the former mayor of March Patsy Brewin "converted into a care home or community building".
Highways team at Cambridgeshire County Council had also supported the scheme.
But deputy leader of Fenland Council, Cllr Jan French, said it was "absolute nonsense".
Speaking at the meeting this afternoon (November 6) she said: "This outline application is premature.
"It is overdevelopment, there are traffic concerns and it will totally change that whole area. Car parking in March is already an issue too.
"It will also be overlooking the park and if trees are removed what will happen to the wildlife and habitat."
Councillors also feared that traffic would come to a "standstill" on the mini-roundabout junction with High Street.
But highways proposed the build would only add 10 more trips of people leaving in a morning and 17 in an afternoon.
Agent Ted Brand, speaking in favour of the build, said: "There were no objections from highways on this scheme and it would provide much needed housing in this area.
"We have gone to the maximum number of properties we think is acceptable for this site and a town centre location.
"Most people would walk into town and not need a car anyway."
Councillor Anne Hay, deputy chair of the planning committee, called proposals "inappropriate".
"This would be completely out of character with the area and have a visual impact for people living in Ravenhill Drive," she said.
Councillor Peter Murphy suggested there could be 90 people at the development all with a car each.
"This dramatically changes the area and worries me greatly that we could approve something like this would then see the designs change drastically," he added.
However, Councillor Will Sutton was in support of the application saying it the support from highways officials should be taken into consideration.
Seven councillors recommended refusal, one voted against and one abstained.
Mrs Brewin, who was a primary school teacher at Dartford Infants and Maple Grove, was also a March town councillor for many years and was once described as the town's answer to Maggie Thatcher.
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