Wildlife enthusiasts and ramblers opposed plans for a new overflow system at Cupwith Reservoir, on moorland above Huddersfield.
Site owner, Dartmouth Estates, was told earlier this year to carry out safety improvements at the site.
Kirklees councillors rejected a scheme that would have seen the water substantially drained, although the owner does not actually need permission to carry this out.
The planning application was for a new overflow system that would allow the reservoir to drain at a much lower level.
Campaigners claimed the scheme would damage wildlife and ruin the enjoyment of walkers. This was disputed by experts.