A plan to privatise the port of Dover has been blocked by the government after protests by ferry operators and residents.

Transport minister Simon Burns announced that he had rejected a long-running campaign to privatise the business through a £200 million-plus trade sale or flotation.

The Department for Transport found that the proposed scheme “would not ensure a sufficient level of enduring community participation in the port”, while there were “other options” apart from privatisation to finance a second ferry terminal in the Western Docks.

The port’s chief executive Bob Goldfield said he was “surprised and disappointed” by what he described as a “curious decision”.

He said: “It flies in the face of all the previous advice we have had. The government has encouraged us to examine our trust port structure and modify it. Now it has been rejected. We have to speak to them and consider the decision in detail. We need to understand why.”

Goldfield has argued since 2008 that privatisation was the best option for raising the required funding for a second terminal at Britain’s biggest ferry port, the first phase alone costing £250 million.

Dover’s three main ferry operators – P&O, DFDS and Sea France’s successor MyFerryLink – did not oppose privatisation in principle, they were argued against the port’s decision to hike rates by around a third over three years, claiming it was to bump up the sale price.

P&O Ferries chief executive Helen Deeble said: “With no safeguards about future tariffs under privatisation, we had very real concerns about future price increases.”

She claimed that Dover had paid “scant regard” to the shipping companies that account for 80% of the traffic.

Local Conservative MP Charlie Elphicke, who led a campaign against the sell-off, told the Daily Telegraph said: “This magnificent victory is the best Christmas present the people of Dover could have.”