Greenhouse Health Club, which has been running for more than 18 years, attempted to gain the licence so that it can sell sex toys and show adult films within its premises on Crawley Road, Luton.
But after more than 430 Bury Park residents signed a petition to counter the proposal the sauna decided to withdraw its application.
One of those who signed the petition claimed that Greenhouse “will bring unpleasant diseases to our communities”, while another slammed the owner for having “no shame” and attempting to expand the business with something “so disgusting near and around holy surroundings.”
Others labelled the sauna “immoral”, “crazy” and “dangerous for our children”.
One of the petition’s signatories wrote that homosexuality stems from “brain diseases/malfunction” and “incorrect thinking”.
The comments have been denounced by LGBT rights charity Stonewall, which told the Herald & Post that the language used is “homophobic and hateful”.
A spokesperson said: “These attitudes can be extremely damaging and can alienate and ostracise people.
“We hope that this is something that the local authorities in Luton hope to solve as soon as possible so that all LGBT locals feel able to be themselves and are accepted without exception.”
Luton Borough Council says that in addition to the petition, it received 103 objection notices which cited concerns over “cultural sensitivity”, the sauna’s “proximity to places of worship” and worries “about the number of families with young children living nearby”.
Prior to the withdrawal of the application Beds Police told LBC that it had no objections to the proposal and that in the last year just two crimes have been reported at the sauna.
One was a report of theft and the other was of alleged domestic violence.
In a letter PC Esther Read told the council: “We anticipate that they will continue to operate in a professional manner and liase with the police and other responsible authorities when required, as they have in previous years.”
One of those who lobbied LBC to reject the application is newly elected police and crime commissioner Kathryn Holloway, who wrote to the council on March 28 after being approached by a member of a “very significant Luton mosque”.
Mrs Holloway wrote: “Luton Borough Council is usually particularly aware of matters of cultural sensitivity.
“I trust therefore that you will fully understand that, given the large and devout Muslim population in this area of the borough, there is naturally a high level of religious and cultural opposition to such a business among these residents which needs to be respected, in my view.”
The PCC, who said that the application had caused “widespread offence and very deep concern”, added her concerns that if Greenhouse was handed the licence “a number of potential policing issues may arise”.
Speaking to the Herald & Post, Mrs Holloway asserted that she did not know Greenhouse had been targeted with homophobic comments.
The PCC said: “I would never support any homophobic literature and I had no sight of any such material.
“I agreed to represent residents in Biscot as they felt incredibly strongly about it.
“I would have taken the exact same stance if it had been a heterosexual establishment.”
Mrs Holloway added: “I think this is also a win for the wider gay community as this establishment is not representative of them as a whole.”