hree applications for "permanent use of the land as a gypsy and traveller caravan site" were submitted to Mole Valley District Council's (MVDC), but last week the planning committee voted 9 to 6 to reject all three.
But the majority of councillors disagreed, saying that would "set a precedent" for more green belt sites in future.
The issue has been disputed since the Gypsies moved onto the Leatherhead land in 2003 – and the controversy looks set to continue.
Susan King, who lives on the site, said: "If they try and put an eviction notice on the site we will then go back to the High Court, and there's no judge who will come down and put us off the land when council officers have recommended to accept it (the planning application). It's ridiculous."
She added: "Those councillors have wrecked our Christmas and our futures and our children's futures. We were gobsmacked to be honest."
At the planning meeting last Wednesday, Councillor Rosemary Dickson (Conservative, Leatherhead South) said: "We all have to abide by the law whether we like it or not. They knew before they moved onto the land that it was green belt and should not have moved onto it.
"If you take away the emotion from this, and the names and the fact it involves Gypsies, and replaced those names with doctors and dentists, would we be considering their application? I do not think so."
Councillor Emile Aboud (Conservative, Fetcham West) said the site caused "substantial and significant harm to the green belt and its objectives".
The dispute began in 2003 when Gypsies bought and moved onto the land and built permanent structures, before seeking retrospective planning permission.
In 2007, a planning inspector granted four years' temporary permission to give MVDC time to find alternative sites, but none were identified by the council.
The Gypsy families living on the site have six months to appeal the latest decision.
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