Wiltshire Council had refused to grant planning permission for the scheme which, alongside the new homes, includes plans for a local centre, retail space, access road and associated infrastructure.
Following an appeal a planning inspector had recommended that the plans be approved.
But a decision letter issued today said the secretary of state had come to a different conclusion.
The letter said Pickles agreed with the inspector’s conclusion that the council could not currently demonstrate a five-year housing land supply as required by the National Planning Policy Framework (NPPF).
Pickles also agreed that the capacity of the appeal site to accommodate 350 dwellings would be "greater than needed to make good the five-year supply".
However, the letter said Pickles disagreed with the inspector’s conclusion "that the desirability of entrusting decisions to community-led planning and encouraging neighbourhood plans is outweighed in this instance by the need to rectify the shortfall of housing land".
In coming to this conclusion, the letter said the secretary of state had given "significant weight to the opportunity which the neighbourhood plan process gives local people to ensure they get the right types of development for their community".
Furthermore, it added, "while accepting the need to plan positively to support strategic development needs, he considers that, in view of the stage of preparation reached by the Devizes Area Neighbourhood Plan (DANP), it would not be appropriate to conclude that its provisions are outweighed by the opportunity which this appeal scheme presents to contribute to meeting the overall housing land requirement".
The letter said Pickles gave "substantial weight to the conflict of the proposal with the terms of the emerging DANP".
It added: "He takes the view that the adverse impacts of granting permission on the appeal site, especially the conflict with the DANP at this stage of its progress, would significantly and demonstrably outweigh the benefits of the proposal when assessed against the policies in the Framework taken as a whole so as to outweigh the presumption in the Framework in favour of sustainable development".
The letter concluded that the case was "finely balanced" but that Pickles did "not consider that the benefits of the scheme significantly or demonstrably outweigh its adverse impacts, particularly as a result of the conflicts with the emerging DANP strategy".