Plans to build flats next to the Bussey Building in Peckham have been withdrawn after opposition from residents and businesses.
The plan included building 11 luxury flats next to the Bussey site which campaigners said would have resulted in businesses closing.
About 150 businesses are based on the industrial area with some saying the proposed development would have caused them to lose their licences putting up to 700 people out of work.
Richard Kightley, theatre manager at the CLF Art Cafe, said he was overwhelmed by the community's response with more than 15,000 people signing a petition against the development.
Mr Kightley said: "We are so happy it's been withdrawn and that the community has pulled through. It's so important to us.
"We're not anti-development but we would have lost our club licence. We are overwhelmed by the response - it's been really heartwarming."
The developer, Frame Property, has been asked for comment about the application but told the Peckham Peculiar website that their intention was never to go against the local community.
Nick Mansour, co-founder of the company, said he hope they could work with the community on developments in the future and he was revising plans for the 133 Rye Lane site.