Council bosses say they were misled into giving permission to a couple to convert a former Nato minesweeper into a floating home.
Keith Morgan, Adur District Council's planning manager, told a public inquiry that the measurements they were given for the boat were wrong.
Owners Fred and Polly Cole submitted a diagram with their planning application which gave the length of the Fische as 44.2m.
The couple had earlier told the inquiry that this figure was based on a waterline measurement given to them when they bought the boat.
Its true length was discovered to be 47m after it was measured following objections from residents whose Shoreham Beach homes are overlooked by Fische.
They complained the German-built vessel was too big for its mooring, affected their privacy and spoilt their views across the River Adur estuary.
The Coles have appealed against the council's decision to revoke planning permission and issue an enforcement notice requiring them to remove the Schutze class minesweeper.
Mr Morgan told the inquiry: "As a result of the complaints the Fische was measured and found to be 47.4m long, which meant it was 1.7m longer than the mooring plot.
"Members of the planning committee felt that if they had been given the correct measurements and an accurate plan they would have been unlikely to grant permission.
"The council considers that planning permission should not have been granted and that it was misled into granting permission because of the inaccurate plans submitted."
Mr Morgan said the impact of the Fische on houses in River Close, which adjoins the towpath, was not acceptable.
He told planning inspector Roger Priestley that its height and position, with its tall bow overhanging the riverbank, was also an important factor in handing over the enforcement notice.
Many of the 41 houseboats moored along the river bank are converted military vessels.
Mr Morgan said: "There are other naval vessels but none with the overt appearance of a warship such as the Fische.
"Its large scale, combined with the fact that it is a naval vessel of austere appearance, give it an over-dominating and somewhat menacing character.
"Its bow is almost as high as the eaves of the rear dormer windows of the houses."
The Coles brought the Fische into Shoreham Harbour as a replacement for their former home, Luna Sea, which sank during storms.
They have been caught up in a battle to keep the boat as their home after they were granted planning permission in October 2003, which was then revoked in February last year.
Michael Cox, Adur's former head of planning, told the inquiry the council's decision to revoke permission and issue an enforcement notice was flawed.
He said the Fische was a direct replacement for Luna Sea and so did not need planning approval.
He also said that because the vessel floated with the tide it was not a fixed structure which constituted development.
The inquiry has been adjourned until April 13.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereComments are closed on this article