Plans for a new £500 million co-operative town with 3,200 homes have been rejected by councillors.

Plans for Owenstown in South Lanarkshire included shops, restaurants and three schools.

It was to make use of renewable energy and be a low-carbon community, but councillors followed the recommendation of planning officers that the size of the scheme was not required and it would impact on the landscape and key road junctions in the area.

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Developers said the town would be owned and managed on a co-operative basis by its residents with surplus funds generated reinvested in the community.

The project was named after social reformer Robert Owen, who improved the lives and working conditions of mill workers at New Lanark 200 years ago.

Developers, the Hometown Foundation, said they are considering an appeal to the Scottish Government and are also working on plans for alternative sites in England and Ireland.

Project director Bill Nicol said: "This part of Scotland, and indeed the country as whole, is likely now to lose out on a unique project which would have brought great economic and social benefits.

"These much-needed homes and jobs may now go somewhere else where they'll be welcomed with open arms. We simply can't understand why councillors have thrown this back in our faces."

The council said the developers had "failed to show that there is demand for the form and scale of development proposed at this location or provide any evidence that there is sufficient interest and demand to fulfil their aspirations".