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Better pay attention – the people are angry. From Seattle to Sweden, rioters have been storming financial districts, breaking bank windows and tearing the heads off parking meters. The streets have become the arena for political expression, with urban gladiators forcing business to wake up to the reality of people power.

And the construction industry has not escaped the coshing. Last week the government scrapped the £130m Hastings bypass – to the cheers of local protest group, the Hastings Alliance, which had threatened massive disruption if the scheme went ahead. The rejection of the road justified six years of pressure that included a public inquiry and an inconclusive government study.

The victory at the battle of Hastings is just the latest in a decade-long list of confrontations in which the public has stalled or defeated large building schemes. The 1990s were coloured by violent clashes over the Newbury bypass and Manchester Airport extension, and the constant embarrassment caused by Swampy and his tree-hugging eco-warriors. More recently, flagship regeneration projects, including the millennium village at Allerton Bywater and the £440m Project Vauxhall in London, have had to be completely rethought as unhappy communities realise protest is a far more potent weapon than legal representation or submissions to planning inquires. Recently, pressure in Berkshire overturned three applications to develop a green field into 2500 homes. Many housebuilders feel the problems they face building on greenfields in the South-east are as much a result of the government's terror of a NIMBY backlash as a genuine desire to stimulate brownfield regeneration.

While trying to keep the public onside the industry has at the same time being putting pressure on the government to find a way to defeat the "crusties" who handcuff themselves to bulldozers.

Last month, Gordon Brown responded with proposals to tear up the planning system so that large projects like the Hastings bypass could be more easily steamrollered through. The chancellor aims to shift the balance back to business by setting up "frameworks" – standard procedures for different types of project – that would "reduce unnecessary debate". It will mean the speedier approval of controversial schemes such as greenfield development, nuclear dumps, motorways and airports.

The timing of Brown's announcement gives the unfortunate impression that the government is responding to civic activism by trying to shut the public out of the debate. Tony Burton, deputy director of the Council for the Protection of Rural England, is dismayed. "The government needs to recognise and respond to the widespread involvement, and not have fast-track planning decisions or remove the public right to object. It will just store up trouble further down the line – like the 1990s backlash, there will be physical conflict and delays to developments."

Burton sees these measures as a withdrawal from Labour's earlier dedication to popular concerns. He says it does not fit with the pruning of the roadbuilding programme.

Burton says there is a range of projects that are likely to leave blood on the building site should the government try to push them through. Potential battlegrounds include the scheme to put the A303 through the Blackdown Hills, and the western orbital that will encircle Birmingham like a Midlands M25.

The government's combative stance seems out of step with the attempts made by the construction industry to assimilate the public into the process. According to housing consultant Roger Humber: "Housebuilders have got to understand the new climate of local involvement and see it for the fundamental change that it is. They need to be more socially aware and less confrontational."

He points to firms such as Wilcon and Linden Homes, which are leading the way with developments that bring communities on board.

Public consultations are risky, however, and lessons are being learned the hard way. Allerton Bywater last year demonstrated how not to consult a community: anger over the proposals forced the scheme back to the drawing-board.

Three housing projects in south London show how community involvement has been evolving over the past two years. The first was Project Vauxhall, an ambitious regeneration scheme by joint developers Wimpey and St George. This aimed to replace two "sink" estates with a 2000-home, high-density scheme, with the development being monitored by a residents' board set up by Lambeth council. Last September, however, the residents rejected the scheme outright.

Critics say the result demonstrates the flaw in ceding power to the public, but resident board member Leszek Rataj disagrees. "The lesson of Project Vauxhall is that there should be involvement right from the start. The tenants have to be consulted at the option-appraisal stage," he says.

A £250m Mace-led scheme in Southwark has suffered similar setbacks. Though the final vote on the Aylesbury Estate will take place this autumn, it has already been rejected once, with several members of the project team walking away as a result. Since then, Alsop Associates has taken over as masterplanner and has worked hard to re-engage the community. David West, the exhausted project architect, says there has been constant consultation and more than 30 active workshops. "The power of the people has been the absolute and primary aspect," he says. "Whatever they want they get. A school here? They get it. Keep those red-brick buildings there? They stay."

The scheme has been through 15 drafts already. Jean Bartlett, chair of the Aylesbury Plus Community Forum underlines the extent of local input: "There were designs that we knew nobody would like. We sent them straight back to the drawing-board."

The keys to integrating the community seem to be clear communication and total involvement. If Vauxhall and Aylesbury were tentative steps, then the £1.5bn regeneration project at Elephant & Castle is a huge leap forward. Here, the public has been given "third developer status" alongside Southwark council and Southwark Land Regeneration.

It is a brave attempt that may take time and money but it represents a willingness to make friction a constructive part of the process. Whether this dialogue can be made to work at the same time as the government is stripping away other instruments of public consultation, however, remains to be seen.