There were cheers from the public gallery as licensers announced that they were to refuse permission for sex shop owners to open a new store in Redcar.

Councillors from Redcar and Cleveland noted a 2,000-strong petition against the plan and argued that the shop was in the wrong location.

At a licensing committee meeting on Wednesday, chairman Brenda Forster said the councillors had agreed that the proposed shop on West Dyke Road would be too near to schools, a Brownies and Rainbows centre and a new multi-million pound town centre shopping development.

Sheffield-based Provincial Enterprises, whose owner Kevin Mitchell already has seven other sex shops, has 21 days to appeal.

Residents and shopkeepers based near to the proposed sex shop made impassioned pleas against the plan at the meeting at Eston Town Hall.

Cynthia Forster, owner of Tropical House, said: "I had three young children come in the shop wanting to sign the petition because they were worried about their freedom to be allowed to come to the shop and play outside."

Andrew Welsh, who lives off West Dyke Road, said the area was too residential, was a main thoroughfare to town, was too near schools, and that allowing the shop to open would adversely effect family businesses and house prices and create a bad impression of Redcar.

Mr Mitchell's barrister, Nageena Khalique, said the business would be advertised sensitively, would have frosted windows and blinds and would be prepared to close while the Brownies and Rainbows had their meetings.

She said: "People like paedophiles do not use sex shops. They do not put themselves out in the open like that. The last sex offender I dealt with at the bar was a 69-year-old former headmaster who operated on the internet and would never have gone to a sex shop. This business will have trained staff who know how to evict underage and undesirable people."

Redcar already has a shop which sells fetish clothing and a newsagent which sells sex videos. Neither have a full sex establishment licence because the number of sex items for sale is limited.