Bloor Homes and Sandleford Farm Partnership had previously submitted a planning application in 2015 to build the houses as well as retail and business space.
However, the council has now rejected the application due to a lack of detail in the proposals and plans for such a large development and no positive sign of that situation changing.
The council had been working with the developers to ensure the successful progress of housing development on the site.
However, the council explained that uncertainty still remained around how the proposal would manage the impact on local roads, schools and other local infrastructure.
A second smaller application from the same companies to build 321 homes on part of the site has also been refused on similar grounds.
Another application by Bloor Homes and Sandleford Farm Partnership for up to 1,000 homes on part of the local plan allocated housing site is awaiting its outcome.
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The Western Area Planning Committee is expected to make a decision regarding this application before Monday 18th December, however, it is likely that the planning officers will also recommend that it is refused.
Councillor Hilary Cole, executive member for planning at West Berkshire Council, said: "This is a disappointing outcome to a saga which has continued for far too long.
“I am saddened that the landowners have not delivered on assurances they gave us that they would work together on one cohesive plan which benefits our community.
“As such, we are not in a position where we can progress with this application.
"While this is a disappointing outcome, we are still on track to deliver the houses needed in the district over the coming years.
“During the delays, other applications have been approved, so the housing local people need will continue to be delivered."