Developer Gladman Homes appealed after its application for 225 new homes, including 25 per cent affordable housing, had been refused by Medway Council.
In March, planning inspector Matthew Nunn had recommended allowing the appeal after finding that the "significant ongoing housing shortfall attracts substantial weight in favour of granting permission for the proposals".
But Brokenshire decided to refuse the appeal after considering the subsequent European Court of Justice judgement in the People Over Wind and Sweetman v Coillte Teoranta case, which was published in April.
The judgement ruled that planning authorities should consider proposals to mitigate negative wildlife impacts from projects or plan at the "appropriate assessment" rather than the earlier screening stage.
According to Brokenshire's letter, the scheme's site would be near to European-designated habitats, including the Thames Estuary and Marshes Special Protection Area (SPA) and the Medway Estuary and Marshes SPA .
Brokenshire found that "the screening assessment undertaken for the purposes of this appeal and presented to the inquiry is no longer legally sound", because it had taken place at the screening stage.
Following the People Over Wind judgement, Brokenshire ordered a new screening to consider the impacts of the proposal on nearby wildlife.
The screening concluded that, in the absence of avoidance or mitigation measures, the proposal could potentially have a significant effect on the nearby protected areas and therefore an appropriate assessment was required.
The appropriate assessment concluded that the proposed development, which included mitigation measures to alleviate recreational pressure, would not adversely affect the nearby wildlife habitats.
In addition, the council could not prove a five-year supply of land for housing in its local plan.
However, Brokenshire noted that paragraph 177 of the National Planning Policy Framework says that the presumption in favour of sustainable development "does not apply where development requiring appropriate assessment because of its potential impact on a habitats site is being planned or determined".
The secretary of state found that the proposal would adversely affect the open and rural character of the landscape and was in conflict with the local plan’s policy for prioritising development in urban areas.
But he also found, in the scheme's favour, that the creation of additional housing carried significant weight and the economic benefits moderate weight.
According to the letter, Brokenshire concluded that the conflict with the NPPF and the local development plan "in terms of sustainable transport carries substantial weight, the conflict with development plan policies designed to protect the countryside and prioritise development within existing urban areas carries moderate weight, and the loss of [best and most versatile agricultural] land carries limited weight against the proposal".
Last month, the government announced that it would modify the NPPF to take into account the People Over Wind Ruling.
In an analysis of the case and another related judgement for Planning, Angus Walker, partner at law firm Bircham Dyson Bell, said: "In my view the court is edging towards declaring that mitigating measures are a fiction invented by member states and shouldn’t be allowed at all."