Councillors at Portsmouth City Council unanimously approved proposals to build the multi-million pound facility at Camber Dock in Old Portsmouth.
It comes as council leaders in Southampton wrote to the Olympic sailing legend about his plans for the base.
Planning permission for a boat-building facility at the former Vosper Thornycroft site at Centenary Quay in Woolston has been granted and civic chiefs in Southampton contacted Sir Ben to remind him the city already has what he needs to get to work.
The new base could have brought 1,000 jobs to the city, according to a report by Sir Ben.
However their efforts were dashed today as Portsmouth planners approved proposals.
As reported, hundreds of people packed into Portsmouth Cathedral on Monday to listen to Sir Ben present his plans.
Seventy-one objects were made to the planning application for the site in Portsmouth, many from residents living near to the proposed site saying they felt they have been railroaded through.
Sir Ben previously said he if was unable to set up the base in Portsmouth, he would consider the Woolston site.