Tesco has withdrawn its application to build a supermarket, a hotel, and flats on the old Toby Jug site in Tolworth.
A spokesman confirmed the supermarket giant has scrapped its plans as they stand, and will consider its options regarding the land, which it bought in 2002.
Roberto Muñoz, Tesco's head of corporate affairs for London, said: "We have reluctantly decided to withdraw the application for our Spenhill site in Tolworth.
"We know how important this site is to Kingston's future and we wanted to thank our many supporters and everyone who has worked hard on this application.
"We were encouraged the officers supported the principle of all the uses of the site, including a new supermarket, a hotel and 269 much needed new homes, but we were disappointed the application was recommended for refusal.
"Our commitment is to delivering something that works for the community and we will continue to consult and review what's best for Tolworth. We will keep everyone informed during this process."
Tolworth and Hook Rise councillor Vicki Harris said: "Lets hope this time they realise that what is needed on that site is not another Tesco store."
In a report they said: "The applicant has been given every opportunity to submit an application which is likely to be considered favourably.
"However the amendments required to make the application acceptable are substantial and would materially change the development proposal.
"They would require further consultation to be undertaken."