Brighton and Hove's ground-breaking policy to tackle the city's crippling housing crisis has been torpedoed by a Government planning inspector.

The city council made a rule that 40 per cent of housing in any large development should be low cost.

It has already been a success in some key projects, including those by Brighton-based Karis, which has complied at its housing development on the Endeavour Garage site in Hove where the cheaper homes are now being built.

Development partner ING is also prepared to have 40 per cent low-cost properties at the King Alfred site in Hove.

But Charles Hoile, who presided over a long public inquiry last year into the Local Plan in which the policy was outlined, has said the proposal is not practical.

He suggests only 30 per cent of low-cost housing should be stipulated on sites of 15 homes or more.

He said 40 per cent would slow the pace of housebuilding across the city and the percentage should be in line with Government policy.

Council leader Ken Bodfish said: "The inspector clearly is unaware that the requirement we have set out has had no detrimental effect upon developers wishing to build housing and he does not understand the lack of low-cost units in the city.

"We believe his interpretation of planning guidelines is counter to encouragement from the Office of the Deputy Prime Minister for more housing in the South-East."

However, Tory housing spokesman Geoff Wells welcomed the decision, although he said 20 per cent would have been better.

He added: "The figure would encourage more developers into the city to build housing. You have to be sensible over this."

Green Party housing spokesman Bill Randall said the inspector's decision demonstrated his ignorance about the crisis facing Brighton and Hove.

He said: "People on low and modest incomes are being forced out because they cannot afford to live here any more.

"The planning inspector's blinkered response will swell the exodus.

"Greens believe the split between new private and social housing in the city should be 50-50.

"Only by building to this target can we hope to begin to solve the housing problems that seriously disfigure Brighton and Hove."

Brighton and Hove has one of the worst housing problems in Britain, with almost no large brownfield sites left for homes because the city is trapped between Downs and sea.

The council will publish the Local Plan report on its web site and make copies available in offices and libraries as soon as possible before seeking public comments.

If it decides to object to parts of the report, as seems likely, there will probably be a second inquiry.