Cumbria County Council has dealt a blow to the prospect of building a £12 billion underground nuclear waste site in its area by voting against the idea.

Council leaders rejected moving to the next stage of studying a possible suitable site, by seven votes to three.

There were huge cheers from environmental campaigners outside the council chamber in Carlisle when the decision was announced.

Earlier, leaders of Copeland borough councillors voted 6-1 in favour of moving to the next stage in the search for a site to bury radioactive waste. The county council vote overrides decisions on the waste site taken by borough authorities in the area. Allerdale Borough Council is due to consider the subject later.

Greenpeace energy campaigner Leila Deen said: "This decision represents yet another major blow for the Government's attempts to force the construction of costly nuclear power plants. Even the Prime Minister admits we need a plan to store waste before we can build a single new plant. This decision shows that dumping waste in uncertain geology near one of the country's most pristine national parks is not a solution."

Cumbria County Council said in a statement that its cabinet has decided that West Cumbria should no longer be considered as a potential location for a deep geological repository to dispose of higher activity radioactive waste, and that the two districts of Copeland and Allerdale should be excluded from further consideration in the Government's Managing Radioactive Waste Safely (MRWS) process.

The 10 members of the Cabinet also agreed that the council will encourage the Government to invest in improvements to the existing surface storage facilities at Sellafield so that there is a more "robust" surface storage arrangement in the decades to come while a permanent solution for the country's higher activity radioactive waste is found. The decision effectively ends the county council's four-year formal involvement in the MRWS process and puts an end to the "doubts and concerns" of many local people, said the statement.

Edward Davey, Secretary of State for Energy and Climate Change, said: "We respect the decision made today by Cumbria councillors. They have invested a great deal of time in this project and have provided valuable lessons on how to take forward this process in future. While their decision to withdraw is disappointing, Cumbria will continue to play a central role in the energy and nuclear power sectors.

"We are clear that nuclear power should play a key role in our future energy mix, as it does today. I am confident that the programme to manage radioactive waste safely will ultimately be successful, and that the decisions made in Cumbria today will not undermine prospects for new nuclear power stations. It is however absolutely vital that we get to grips with our national nuclear legacy. The issue has been kicked into the long grass for far too long. We remain firmly committed to geological disposal as the right policy for the long-term, safe and secure management of radioactive waste. We also remain committed to the principles of voluntarism and a community-led approach.

"The fact that Copeland voted in favour of entering the search for a potential site for a GDF (geological disposal facility) demonstrates that communities recognise the benefits associated with hosting such a facility. For any host community there will be a substantial community benefits package, worth hundreds of millions of pounds. That is in addition to the hundreds of jobs and major investment that such a huge infrastructure project could bring. We will now embark on a renewed drive to ensure that the case for hosting a GDF is drawn to the attention of other communities."