The council won an appeal court challenge against release of land in the 'strategic gap' which separates the two towns, for development.
The dispute centred on 100 hectares of land at Ifield Court Farm, Crawley, owned by the Commission for the New Towns which the council maintained should be kept as open land in accordance with the 1993 West Sussex Structure Plan.
The Master of the Rolls, Lord Woolf and two of the country's other senior judges, Lords Justices Brooke and Robert Walker agreed.
Counsel for Horsham, Rhodri Price Lewis, had argued that where land such as Ifield Court Farm was an integral part of the open countryside between the towns and that to allow development of it would seriously undermine the aims of the planning policy.
He claimed that exclusion of the land from the 'strategic gap' would contribute in a significant way to the 'coalescence' of Horsham and Crawley.
The New Towns Commission, argued on the other hand, that loss of the land would not result in coalescence or loss of identity of two towns.
But Lord Woolf said that Horsham was under a duty to prevent coalescence between the two towns and had been entitled to take the view that exclusion of the land from the gap could have a tendency to encourage such coalescence.
Their view, he said, had clearly been supported by the planning inspector who had considered that the land in question ought to be kept free and this was a decision which he said the court should not interfere with.
He said the planning inspector had been entitled to take the view that redesignation of the land, without very strong justification, could trigger off 'the very real danger of cumulative erosion which the policy was designed to prevent.'