A blueprint for the development of open countryside near Worthing has been branded "fundamentally flawed".
Government inspector Peter Jolly said the development brief for West Durrington should be comprehensively reviewed.
He said Worthing Borough Council had failed to recognise the importance of Castle Goring, one of only two Grade I listed buildings in the borough, and its historic parkland setting.
Borough planners are now studying the inspector's comments before preparing a report for councillors early in the New Year.
Mr Jolly was appointed to examine Worthing's new Local Plan after a total of 1,673 objections to a wide range of proposals, including the construction of 825 new homes at West Durrington, were tabled.
He concluded that the number of houses earmarked for the suburb should be reduced from 825 to 700, and a business park proposed for the north west corner of the town, in an isolated field off Titnore Lane, should be shelved.
Mr Jolly also strongly rejected the idea of a pedestrian and cycle link through Goring Woods to the site of the business park.
He said: "This is the largest block of ancient and semi-ancient woodland in the borough. These are irreplaceable assets."
In addition, Mr Jolly was critical of proposals to give the new estate its own identity by creating a village green and a shopping area.
He said: "They would contribute little towards giving the new development a sense of separate identity or self-sufficiency."
Mr Jolly said the Tesco superstore in West Durrington needed to expand and more car parking should be provided, but the council's idea of the store building an upper floor was against company policy and appeared to be unacceptable.
The inspector also examined plans for house-building in Goring Gap, north of the railway line, which separates Worthing from Ferring.
He said the area should remain as farmland, which has delighted conservationists.
But 90 homes are likely to be built on open land north of Beeches Avenue, Charmandean, which has angered residents, some of whom have vowed to move.
Mr Jolly supported plans for shop units on the site of the Union Place police station in the town centre and possibly part of the neighbouring car park.
But he argued that the construction of shops on the eastern side of Montague Place, next to Woolworth's, would cause unacceptable harm to the appearance of the conservation area.
Council planning policy manager Clare Mangan said officers were now considering the detail of Mr Jolly's report.
She said: "We have to have a very strong justification for not following the inspector's recommendations."
She said a report would go before councillors in the New Year, probably in February.
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