ATHLONE House, the historic Victorian mansion on the fringes of Hampstead Heath, has been saved from the wrecking ball today (Monday) after a Whitehall ruling that it must not be demolished.

The mystery owners of the house in Hampstead Lane, dating from 1871, had appealed against a Town Hall decision to turn down a planning application that would have seen the mock-Elizabethan pile reduced to rubble and replaced with an £80m neo-classical eight-bedroom mansion designed by the architect Robert Adam. 

But planning inspector Colin Ball today said Camden Council's decision last year to block the scheme should be upheld. The inspector said the plans for the new mansion would infringe on Metropolitan Open Land – the urban equivalent of the Green Belt – and that the designs would have a detrimental impact on both Hampstead Heath's protected views and the Highgate Conservation Area.

The report said: “The new house by reason of its size, bulk form and design, is materially larger than the existing building  it replaces on Metropolitan Open Land and is also more intrusive than the existing building. It is considered to be inappropriate development.”

Athlone House was sold by the NHS in 2003. Built by chemical industrialist Edward Brooke, it has been used as a hospital for First World War soldiers, acted as a secret RAF intelligence base during the Second World war, and then handed over to the NHS for long term care of older people.

A controversial planning application was passed for its new owners to build blocks of flats in the gardens in 2005, as long as they restored Athlone House to its former glory.

Instead the luxury flats were built, sold and then a new application was put in to demolish Athlone House and build an £80m mega-mansion boasting four corner towers, a ballroom, a swimming pool  underground car parking and eight massive new bedrooms.  The gardens were to be landscaped with designs influenced by the Palace of Versailles.

The first application was dismissed by the Town Hall and then the planning inspectors in 2011 – while a second, tweaked application has now also been dismissed.

Repeated requests by the new Journal over 10 years as to who the owners of Athlone House are have been rebuffed by the company's solicitors – but it was revealed in the planning hearing that it was was owned by a family with school age children who want to use it as their London base.

An alliance of civic groups including the Highgate Society, the Heath and Hampstead Society, Highgate Conservation Area Advisory Committee and Athlone House Working Group campaigned against the plans.

Highgate ward Green councillor Sian Berry said: “The judgment is pretty clear that the existing house is a valuable part of Highgate's character and views from the Heath, and needs to be preserved. If this is true then nothing anything like the proposed new building would outweigh the harm of demolishing Athlone House and an important part of our area has been saved for the future. Congratulations to the campaigners. Now Camden Council must push ahead with enforcing the Section 106 agreement and make the owners restore the home as they are legally obliged to.”