The Kent project was selected from 256 nominations. The other finalists are the Grange Park Estate in Blackpool, the Urban and Rural Renaissance of County Durham and Joining Up Northumberland Park in Tottenham, north London.
The award celebrates projects and initiatives that involve community action and contribute to making towns, cities and rural communities better places in which to live and work.
An independent panel used the Egan Review's range of criteria for what makes a sustainable community to select the finalists.
The 140ha Chatham site now provides homes for 2,400 residents and jobs for 4,500 people. The South East England Development Agency and Chatham Historic Dockyard Trust are pursuing further mixed development opportunities in the area.
Fuelled by active co-operation between local stakeholders, the physical environment at Northumberland Park has been cleaned up and crime reduced in the area. A 200-strong stakeholder group was also crucial in the County Durham renaissance programme.
Grange Park's reputation has been enhanced by addressing issues such as high unemployment rates, poor education and image, social and behavioural problems and environmental dereliction.