The application for a four year licence for Lovebox was rejected by Tower Hamlets Council yesterday.
At the meeting councillors heard that crime shot up in the ward containing Victoria Park - where the festival is held each year - in the month the festival was on.
UKCrimeStats figures showed that in Bow West ward in 2012 overall crime in the month Lovebox took place (June) was 64% higher than the months either side and in 2013 in the month Lovebox took place (July) overall crime was 44% higher than in June and 60% higher than in August.
Bow West councillor Joshua Peck spoke against the application at the meeting and told council officers that residents had raised numerous concerns with him regarding anti-social behaviour and noise.
He said: "A four-year licence is inappropriate as it removes the ability of residents to make representations each year. The organisers seem to be blind to the issues that they cause in the area each year."
The applicant argued that last year had been their most successful yet and they weren't aware of many complaints.
Legal advisor Simon Taylor said his team had received crime figures form the Metropolitan Police that were directly attributed to the festival and these figures were considerably lower than the ones Cllr Peck had presented.
He said: "It's our intention to give residents a far bigger say than before. We want to stop finding out about these concerns at this time of the year at licensing meetings when we haven't been informed of them before.
"Having a four year licence gives more confidence to investors - for example buying new sound equipment - if we know we're coming back again next year it's very helpful."
The committee rejected the application on the grounds of crime and disorder and public nuisance.
Licensing committee vice chair Peter Golds said: "We were concerned by the problems suffered by the residents and we don't think there are any conditions that could be added to the licence to make it better."
Following the meeting, Lovebox's team said they will appeal the decision.
A spokesman from Lovebox said: "We are extremely disappointed that in spite of there being no objections from any members of the public, or any of the responsible authorities, throughout the statutory consultation period, that a single objection from Cllr Peck, which we believe to be both inaccurate and misleading, has resulted in the Licensing Committee refusing our initial application.
"Following eight months of planning and consultation, our application has the full support of the Safety Advisory Group and Statutory Authorities, Officers of the London Borough of Tower Hamlets who specialise in licensing and events and the Metropolitan Police, all of whom we work very closely with to minimise any inconvenience to local residents.
"Having been through this same process in previous years, we will of course be appealing this decision and look forward to having the opportunity to present the wealth of supporting evidence and facts to the court in a manner which, we believe, we were not afforded by the Licensing Committee."