The Sun Haven Holiday Park already has 100 seaside pitches for tents and mobile caravans, along with 39 static caravan and lodge units.
But its owner, Steven Tavener, wants to expand the park into a nearby field, providing space for 15 more static caravans and 15 more holiday lodges.
Cornwall County Council granted planning permission for the proposal, subject to conditions relating to landscaping and other details, in March last year.
But William Corbett, the leader of St Mawgan Parish Council's planning group, challenged the decision at the Royal Courts of Justice in London.
And Corbett triumphed yesterday when a High Court judge quashed the planning permission, saying that a crucial local policy had been left out of account.
Cornwall Council had granted consent on the basis of a planning officer's flawed report, ruled Judge Mark Ockelton QC.
The officer had reported to the council that the extension would have only a "slight or moderate" and localised impact on the Watergate and Lanherne Area of Great Landscape Value (AGLV).
Being in a valley, the development would have little effect on distant views and the officer also pointed to the economic benefits of the scheme.
It would, she said, boost tourism in the area, create new jobs and promote "inward investment of £1.8 million".
But Judge Ockelton said the report made no mention of a local development plan policy which states that planning permission will not be granted for any development which harms the landscape, features and characteristics of an AGLV.
The policy had been in place since 2001, since when the area had changed significantly, but the judge rejected claims that it was out of date.
It had been specifically saved as part of the local development plan as recently as 2016.
Although the policy does not specifically ban all development in AGLVs, it prohibits any proposals that would be harmful.
The officer's report, he added, simply balanced the merits of the holiday park's expansion against the demerits, without taking into account "special requirements" that had to be satisfied before development within an AGLV could be permitted.
The judge said that, due to the deficiencies in the officer's report, councillors who granted the planning permission "did not appreciate that they were making a decision which did not accord with the development plan".
He concluded: "The decision granting planning permission will be quashed."
Last week, land promoter Gladman Developments failed in an effort to overturn a High Court ruling that found a planning inspector had wrongly applied the presumption in favour of sustainable development when approving its plans for 85 homes on the edge of a village in Kent.
Corbett v The Cornwall Council. Case Number: CO/1452/2018