A cuddly fairy on a mission to “deliver happiness” to her disaster-hit hometown has been crowned Japan’s most popular mascot, but unseemly rivalry among competitors has forced organisers to announce that this year’s contest would be the last.

Takata-no-Yumechan defeated almost 400 other yuru-kyara – “gentle characters” – to take the title at the mascot grand prix in the north-eastern prefecture of Iwate on Sunday, narrowly beating Yurunakin, a dog mascot from Osaka prefecture, and Tsurugon, a dragon-like character from Saitama prefecture.

About 300 other mascots competed in a separate category for companies and other organisations.

Yumechan was created in 2012, a year after the city of Rikuzentakata, also in Iwate, was destroyed by a powerful tsunami that killed more than 18,000 people along the north-east coast of Japan.

The white mascot, whose ears resemble the city’s famous pine trees, has a star on her forehead to lead children to safety in the event of a tsunami and dispenses “dreams and happiness” from a bag slung over her shoulder.

She received more than 280,000 votes, combining those cast online and during the two-day event.

Yumechan is likely to hold the title in perpetuity after the grand prix’s organising committee said the contest would be discontinued amid concern over the lengths that some supporters were willing to go to give their mascot a fighting chance of taking the title.

Since its debut in 2011, the event has grown in size and prestige, with local governments launching aggressive campaigns to secure online votes.

“Winning had become the goal, and the contest had lost its original purpose of revitalising the regions,” the committee said, according to Kyodo news agency.

Yuru-kyara are big business in Japan, where more than 1,000 mascots provide a touch of whimsy to everything from the serious business of paying taxes and saving the environment, to promoting tourist spots and regional cuisine.

Products bearing the image of Kumamon, a mischievous black bear from the south-western prefecture of Kumamoto and the inaugural grand prix winner, last year generated sales of ¥157.9bn (£1.15bn).