Developer Bellway had sought planning permission for up to 65 homes on land opposite Malling Abbey in West Malling, Kent.
Founded in around 1090, the abbey is home to a group of Benedictine nuns who have adopted a simple lifestyle with an emphasis on silent and isolated worship.
The abbess, Mother Mary David said the proposals presented a "dire" situation for the abbey, and could have forced them to move.
But a planning inspector has now dismissed an appeal by Bellway and refused it permission to build the homes after recognising the potential disruption to the abbey.
Mother Mary said: "We are delighted with the outcome of the planning inspector.
"We and our guests, who number more than 1,000 a year, are looking forward to continuing our life at the abbey in the God-centred quiet and peace."
She said the community was "grateful and humbled" by the amount of local support it had received.
In her decision, which was published on Thursday, planning inspector Frances Mahoney said part of the nuns' concerns was that noise from a proposed area of nearby open space within the development could "drift into the quiet areas of the abbey where the contemplative atmosphere, so important to the nuns, would be mutated".
She said while it may be possible to "design out any conflict", she could not be certain it would work.
Ms Mahoney said the harm to area's heritage outweighed the identified public benefits of the housing proposals.
Trudy Dean, chair of West Malling Parish Council, said she was "over the moon with the decision".
She said: "West Malling Abbey is the reason why the town exists.
"It was the first building here and all the other buildings were established to provide services to the abbey itself."
Mrs Dean said an online crowdfunding campaign set up by the council generated more than £20,000 to help cover legal costs.
Reverend David Green, vicar of St Mary's Church in West Malling, previously said the order was made up of around 10 to 15 nuns, whose ages are estimated to range from 35 to 95.
According to the planning inspectorate, Bellway lodged an appeal against a failure by Tonbridge and Malling Borough Council to give notice of a decision on its housing application within the prescribed period.
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