Controversial proposals to build new homes on Crystal Palace Park have been upheld by the High Court.
The Crystal Palace Community Association (CPCA) had challenged the £68m London Development Agency master plan for 180 luxury flats, a new regional sports centre, 50m swimming pool, a museum and a
But the government gave its backing to the 20-year vision in 2010 along with Bromley Council, the Mayor of London and English Heritage.
Chairman of the CPCA John Payne feared the decision to go ahead with the development could set a precedent for similar park projects.
He will now have to pay £2500 towards the government's legal costs of fighting their claim.
He said: "We're very disappointed by the High Court decision.
"It shows if you demonstrate special grounds or circumstances developers will be allowed to build on our parks with the aid of local authorities and other agencies.
"It's a very worrying precedent. We will now see commercial elements queuing up to develop on parks."
Mr Payne added: "The dubious improvements to the park will be paid for by the incremental sale of parts of the park.
"It's like if you want to restore the crown jewels then you pay for doing it by taking out the odd stone and selling it."
A spokesman for the Mayor of London Boris Johnson said: "The Mayor is pleased that vital regeneration in Crystal Palace Park has moved a step closer.
"He is committed to finding a workable solution for the area, and has signalled this commitment by setting aside £2m in this year's budget to support regeneration, driving jobs and boosting
economic growth in the capital."
The CPCA says it will be seeking further legal advice to appeal the decision.
The park was originally created to house the Crystal Palace, the highlight of the 1851 Great Exhibition, on the Penge Place Estate in Sydenham Hill.
But the Victorian structure was destroyed in a fire in 1936. The park, which has a Grade II* listing in the English Heritage's Register of Historic Parks and Gardens, now houses the Crystal Palace
National Sports Centre and the Italian Terraces.