The West Sussex County Council said it refused an application by Celtique Energy for a three-year oil and gas exploration bid.
A drilling site in Balcombe, in West Sussex county, was the target of major protests last year by activists concerned over the drilling operations of Cuadrilla Resources. Demonstrators said the campaign was a prelude to a hydraulic fracturing operation, though the process known also as fracking was not conducted at the site.
Brenda Pollack, a campaigner with the British Friends of the Earth, said the latest West Sussex decision was a step in the right direction.
"Nobody wants to see Sussex ruined by industrial drilling for dirty fossil fuels," she said in a statement. "If Celtique had been allowed to test for oil or gas, then there's every chance that fracking would have followed."
The council said it rejected the application because "there were simply too many highways issues and other issues of concern for any decision other than refusal in this instance."
Celtique Energy Chief Executive Officer Geoff Davies said in a statement he was "clearly very disappointed" with the decision.
The British government has embraced shale gas as a viable component of a diverse energy mix, though hydraulic fracturing campaigns are in their infancy.