Cornwall Council has rejected plans for a surf school to be built in Hayle.
The Wave Project had hoped to build the world's first purpose-built beach school in Cornwall.
The surf charity wanted to support vulnerable children who struggle to engage with traditional school lessons and are at risk of permanent exclusion.
The charity's planning application has been rejected by the council on grounds it is "unsuitable and unsustainable" for the open countryside.
Chief executive of the Wave Project Joe Taylor told ITV News West Country: "We are disappointed by this decision, especially as the scheme received no objections from Natural England or the local Area of Outstanding Natural Beauty team.
"But hope we can find an alternative site for this exceptional project.
"At a time when children's mental health is at crisis point, we know how much this project is needed.
"We know our beach school project can help them, so feel we have a duty to keep trying until the new campus is complete."
Cornwall Council rejected the planning application due to the 'large scale' of the project and the risk of 'significant environmental harm'.
The council listed a number a reasons why the plans were turned down, including:
It would be clearly visible from several parts of the public domain
It would fail to be sensitive to its surroundings or respect the character of the countryside
The environmental harm is not considered to be offset by the economic and social benefits
Ultimately, the council believes the proposal does not "deliver a well-balanced mix" of these three core objectives - adding it is therefore an "unsuitable and unsustainable development" in the open countryside.
The Wave Project already helps thousands of children after it became the first charity in the UK to offer surfing prescribed by the NHS.
Mr Taylor said: "Children who take part in Beach School show increased attendance, lower sanctions, improved performance and a more positive attitude.
"The Wave Project has decided not to appeal this decision, partly on the grounds of cost, and partly because we respect the views of the local community in Gwithian, who voiced objections to the project.
"However, we would still like to build it. We have plans ready to go, an evaluated curriculum and partnerships with schools in place.
"We need to find a new site of at least an acre of land within walking distance to a beach."