I've been running a phpProxy website for a few months now, its using loads of bandwidth and getting lots of visitors. I wanted to add google but when I applied they declined the application.

Page type: Your website is a type of website that we do not currently
accept into our programme. Such websites include, but are not limited
to, chat sites, sites that drive traffic through cybersquatting, and
sites that use excessive keywords in the content or code of their pages.

I dont understand why? Almost every proxy website is supported by google. Have they stopped allowing proxy sites now?

you should register other website and put contents approved by google adsense.. use that code to your proxy website.. that will work..