Approval had been sought from the Meander Valley Council to build a women's facility called Home of Hope at the former Meander Primary School site, which the council supported earlier this year.

An appeal was lodged with the Resource Management and Planning Appeals Tribunal by Timber World, owned by former Greens leader Kim Booth’s son Bronte.

The tribunal found the planning application had been incorrectly categorised as hospital services, and the development application had not been advertised properly.

Meander Area Residents and Ratepayers Association president Bodhi McSweeney said the group felt vindicated and heartened by the decision.

“No community group should be required to take such drastic measures.  The whole process has cost time, money and extreme personal anxiety for Meander residents,” she said.

“The fact is the main street in the middle of a small country village is a totally unsuitable location for any drug rehabilitation facility. The school site should be used to benefit the Meander community itself, both socially and economically.”

But Teen Challenge Tasmania executive director Tanya Cavanagh vowed to keep fighting.

Ms Cavanagh recognised there was not "one box" that Home of Hope fit under in terms of planning categories.

“We are now seeking advice on how we re-do our application and we will go through due process from there,” she said.

She said demand for a Tasmanian service is high and for the past few months she had been working with three Tasmanian women in their 20s, two of whom now have beds at Teen Challenge centres on the mainland.

Ms Cavanagh said the third woman, aged 21, has disappeared.

“I don't know if she has relapsed but that was four weeks ago and noone has heard from her. We don't know if she is alive or dead, we just can't find her. That's the reality of what we are dealing with,” she said.

“If the centre was open I could have said 'come with me' and I would know where she is and that she was starting her journey towards health.”