The former footballer was accused of risking national security by building an artificial harbour at his holiday retreat, with Ministry of Defence officials saying the breakwater on the Cowal peninsula could be a hazard to Faslane nuclear submarines.
He had the structure built before submitting a retrospective planning application to Argyll and Bute Council for the "tidal breakwater built with gabion baskets and bollards constructed on a slipway".
Councillors ordered McCoist and his neighbour James Kean to demolish the structure after hearing the MoD view and a string of other objections but the pair appealed to the Scottish Government. Planning reporter John Martin has dismissed their bid.
"While the purpose of erecting the breakwater close to the coastal settlement is understood, it is an unsightly engineering solution that appears out of character in such a natural beach environment within this area of panoramic quality," said Mr Martin in his judgment.
"The open texture of the gabion baskets has trapped debris and seaweed within the structure while, since the recent storms, large areas of seaweed have accumulated within the enclosed walls, all of which makes the breakwater appear unsightly and detrimental to the outlook over the loch."
McCoist and Mr Kean said the breakwater was to prevent tidal damage and erosion to the shore and nearby road. But in a written objection to council planners, the MoD claimed secret underwater microphones in the area - believed to be designed to pick up enemy threats - could be disturbed.
Their letter of objection stated: "Hydrophone equipment is positioned close to the development which is required for national defence purposes. The site operators QinetiQ have expressed concern about the possibility of new moorings and increased leisure activity as this may have the potential to affect this equipment.
"Impacts on background noise during ranging activities, from jet skis in particular, would be detrimental to those activities.
"When submerged, the gabions could pose a hazard to navigation in an area where boat transfers from vessels to shore takes place."
Planning officials said it created an air of "exclusivity" and denied public access to the beach.
Councillors unanimously rejected the "artificial harbour" and issued an enforcement notice for removal.
Mr Kean's legal representative Stuart Chalmers said last year the men built the breakwater after the road which provides access to their properties "caved in". He said his client would "vigorously appeal" the decision as the council had failed to recognise the necessity of protecting the sea wall and road.
In 1996, McCoist won a separate planning battle with councillors over a wall he built to give him privacy at his home in Bridge of Weir. Planning officials had threatened to serve an enforcement notice demanding that he restore the boundary wall - extended without planning consent - to its original height. The player appealed to the Scottish Secretary, who ruled that McCoist should be allowed to keep the extension intact.