The government of Goa has refused permission for promoters to open the India's first Playboy club at the upmarket Candolim beach.

Women's groups and conservative politicians had attacked the proposed 22,000-square-foot club, with Michael Lobo, a legislator from the state's ruling Bharatiya Janata party saying it was tantamount to promoting prostitution.

After a month of heated debate, the government barred the club from opening in one of India's most famous party locations on technical grounds.

The chief minister, Manohar Parrikar, told the state assembly on Monday that licences to run so-called beach shacks – even ones as large as the proposed Playboy club – could not be granted to companies, only individuals. "We cannot give them a licence to operate a beach shack," Parrikar said.

Mumbai-based PB Lifestyle announced last year it had obtained an exclusive licence to open Playboy clubs, hotels, bars and cafes and sell Playboy-branded merchandise in India. It said it would start with a club in Goa and then expand to the southern city of Hyderabad.

PB Lifestyle's chief executive, Sanjay Gupta, did not immediately respond to a message left at his office.

He said last year he was working to recast Playboy into an aspirational lifestyle brand that wouldn't spark a backlash in the conservative country, distancing itself from nudity and toning down the traditional, body-hugging bunny costumes.

Goa's decision does not bar the opening of a conventional Playboy club in in the state, just the beach shack, but

Lobo has called on the government to prevent Playboy from setting shop in any form in the state.

"It is not just a question of permitting Playboy in Candolim. It should be banned across Goa, because Goa should be veered away from international chains which promote vulgarity," he said.

Agnelo Fernandes, a state Congress party politician, on whose property the beach club was to be located, called the government's decision "unfortunate". He has been acting as a de facto spokesman for the project during the controversy.

"It would have been great for Goa to have an international lifestyle brand. There is no question of vulgarity. Our bunny costumes which we had designed were more sober than the ones worn by the cheerleaders at the IPL (Indian Premier League)," Fernandes said, referring to the razzmatazz laden cricket league.