They had been campaigning for years to reopen a defunct train track between Horsham and Guildford.
But now their plans have been scuppered by a group of canal enthusiasts.
The English Regional Transport Association has been campaigning to reopen the section of Horsham line which has been shut since the 1960s.
It also wants to reopen the Horsham to Shoreham line - both have been closed for more than 50 years but much of the original track beds survive.
However the Wey and Arun Canal Trust - established to reinstate London’s ‘Lost Route to the Sea’ - wants to build a new link near Guildford which would include part of the old railway.
And the plans have now been given the go ahead by Waverley District Council.
The link will provide 1,000 yards of new canal from the Wey Navigation by the A281 bridge to a point near the historic aqueduct on Gosden Meadow by Tannery Lane, Bramley, near Guildford.
English Regional Transport Association chairman Richard Pill said: “This will scupper the rail hope.” But, he said, the group was not giving up its battle entirely.
“Obviously we wish the rail was being put first than a canal/other interests, but we are not giving up as the corridor lends itself to expansion and new interpretation and so accommodating a railway, a canal and cycleway/walkway means expansion is to be played for.
“This is a strategic missing link and deserves more strategic support and recognition.”
The Wey and Arun Canal Trust says its plans for what it calls the ‘Bramley Link Phase 1’ will begin to connect the Wey Navigation towards reinstated parts of the Wey and Arun Canal.
It says it would enhance the area with an extension to the existing Hunt Nature Park and provide a new canal lock, two bridges, a canal basin for turning boats, landing stages for canoes, bike racks for cyclists, seats and new paths for walkers.
It says the proposals would also provide a reserve for wildlife with ponds to support amphibians and woodland to support badgers and otter holts.