The decision not to push forward the application to allow a building in Houston Square, in Johnstone, to be converted has been dubbed a "victory for common sense" by one local shopkeeper.
As reported in the Evening Times earlier this month, more than 100 people wrote letters objecting to the application.
Businesses and residents had feared approval of the plans could have opened the way for the premises to be converted by a multi-national food and drink company posing a threat to independent cafes and pubs.
They also said noise and parking could have a negative effect on elderly residents nearby.
Now the contro-versial proposals have been withdrawn and a new application to convert the premises - currently a co-op store and charity shop - to retail submitted.
Deli and restaurant owner Scott Keenan welcomed the decision.
He said: "It's a victory for common sense. The premises is underneath an old folk's home and there are three traditional boozers next to it which have been there for many years.
"It is the best decision for everyone and there seems to be a big sense of relief in the community."
Local councillor Andy Doig led the campaign to urge the council to reject the planning application.
Councillor Doig said: "This is a victory of people power. The people of Johnstone don't want a new pub in the arcade and said that loud and clear. I am delighted that common sense has prevailed."
A spokesman from Renfrewshire Council said: "The applicant has submitted a revised application for the site.
"The change of use to create retail/office application and a public house has been withdrawn.
"The new application is for a mix of retail and office space."