A controversial blueprint for the building of hundreds of homes in Chippenham has been labelled unsound by a government planning inspector.

Inspector Andrew Seaman delivered the verdict – which followed a warning made in 2012 – after examining Wiltshire Council’s core strategy for the town, a document that has been taking shape since 2009.

He is now considering removing all strategic housing allocations from the town.

Mr Seaman said Wiltshire Council’s assessment of site options for new houses in the town was unfair, and said plans by Chippenham 2020 – a company formed to promote an urban extension to the east of Chippenham – were not properly considered.

It owns the freehold of 168-acre New Leaze Farm to the northeast of Monkton Park, a site not included in the core strategy.

In a letter to Wiltshire Council. Mr Seaman says: “The evidence does not indicate that the council considered equitably the reasonable alternative of an East Chippenham allocation against the preferred option.”

He said the 2020 site would perform better than the council thought and felt that leaving it out undermined housing allocations.

The core strategy, which guides development proposals over the next 13 years, had 750 new houses planned for North Chippenham (south of Birds Marsh), 700 at Rawlings Green East Chippenham (near the college) and 800 for South west Chippenham (Patterdown area).

In October 2012, Mr Seaman wrote to Alistair Cunningham, the council’s director of economy and regeneration, to raise doubts over the strategy’s sustainability appraisal (SA) and queried if it could withstand a legal challenge.

He wrote: “Is the council satisfied... that it has considered the reasonable alternatives to the preferred options shown in the submitted Local Plan and fairly and that the reasons for discounting alternative options remain valid?”

But Mr Cunningham replied: “The SA report clearly shows what reasonable alternatives have been considered for each core policy, proposed strategic housing site and proposed strategic employment site.”

On reading the inspector’s findings, town councillor Sandie Webb said: “It is amazing. He’s exercising common sense. I hope we can get somewhere sensible now.

“Patterdown is illogical, with no schools they (pupils) would have to go through the centre to Abbeyfield and increase traffic. The Patterdown development would service the likes of Next and kill the town centre even more.”

Independent Wiltshire councillor Chris Caswill said: “The Chippenham plans have to start again from scratch.

“There is now nothing in place to regulate development proposals in and around the town, and it will be open season for developers until this mess is sorted out and a new plan is prepared, the public are consulted, their views properly considered and a new plan approved.

“It is a mess and a shameful one for council leadership.”

Toby Sturgis, cabinet member for spatial planning at Wiltshire Council, said: “Adopting a plan which shapes the future of Wiltshire is an incredibly important process and one that inevitably takes time.

“We understand some local people are concerned about the length of time this is taking but, as this plan has progressed, we have had to adapt the strategy and make amendments to reflect changing government policy which impacts on the planning system.

“Gathering feedback through public consultation also takes time but ensuring local people are at the heart of this process is fundamental in delivering sustainable growth in communities both in terms of jobs and homes. “We will always consult with communities even if this means the process takes a little longer.

“Our next step will be looking into the points raised by the inspector and providing more information.”

Chippenham 2020 and Showell Protection Group both asked planners to defer a decision on an 18-hectare employment site at Showell Farm until the inspector’s views came back, but Wiltshire Council approved it in July.

Tony Peacock, the Showell group’s coordinator, said: “What a farce. Hundreds of thousands of pounds of taxpayers’ money and years of planning consultation wasted because the planners were determined to push ahead with their own agenda.

“The Minister of State must surely call it in now his own inspector has said the plans for Chippenham are unsound. “An urban extension to the south west of Chippenham is now completely undermined.”