A fight between neighbouring councils over housing was settled today in the High Court after a judge threw out an appeal by Stevenage Borough Council.

Duncan Ouseley QC agreed with an independent planning inspector’s ruling in May that the authority’s plans to build 12,500 homes across its borders in North Herts green belt are “unsound”.

The project was drawn up to meet imposed housing targets under the previous government’s East of England Plan. This plan has been rejected by The Coalition in favour of a devolved system – allowing councils to determine their own housing numbers.

The court’s decision is a victory for North Herts District Council which opposed the move at a public examination.

Tom Brindley, NHDC planning portfolio holder, said: “The council has fought long and hard against these imposed housing figures which bear no relationship to the individual circumstances within our district. The judgement reaffirms the legality of this council’s actions.”

He added the decision lays down a precedent for other councils: “It is most helpful that the legal position has now been clarified as many authorities up and down the country have been facing uncertainty about the status of emerging legislation and how that applies to their own local development framework.”

A public consultation will be held in 2012 to determine how many new homes should be built in the district.

John Gardner, Environment and Regeneration portfolio holder at Stevenage Borough Council, said members were dissapointed with the decision which will force a rethink of how to meet housing demand in the town.

He said: “It represents yet another attack on the provision of vitally needed housing and economic growth at a time when the country needs both so badly. It means that we will need to think again about where to build enough homes for the future and how to regenerate the town centre. We hope to be able to make an announcement within the next six months.

He added: “We remain committed to our vision of an economically vibrant town that both meets the aspiration of its people and contributes to the sustainable economic growth and the prosperity of our country. It is regretted that, at this point in time, this objective does not appear to be shared by some other bodies.”