The consultation also covers the criteria the government intends to use to determine whether local planning authorities should be placed in 'special measures' because of poor performance.
The planning guarantee proposal, first announced in the March 2011 Budget, would not replace the eight and 13-week statutory time limits for determining applications.
The Department for Communities and Local Government (DCLG) said the guarantee is intended to provide a maximum "longstop date" by which any schemes that take longer should be determined.
In the consultation paper, the DCLG says that it would also seek to amend secondary legislation to require a refund of the planning application fee, where an application remains undecided after 26 weeks.
It says that this additional measure would help to ensure the guarantee is met and would apply to both councils and the Planning Inspectorate.
Applications subject to a planning performance agreement would be excluded from the measure, according to the document.
In the paper the DCLG says: "We would want to avoid any risk of applicants deliberately delaying the determination of an application in order to obtain a refund, or of authorities refusing application just to avoid the penalty."
"Such behaviour would be taken into account by an inspector in considering whether to award costs in any subsequent appeal proceedings," it adds.
The consultation closes on 17 January.
Planning performance and the planning guarantee is available here