In an open letter to local councillors on Telford & Wrekin Council, leader Kuldip Sahota said the NPPF is "forcing" the authority to accept major planning applications for new homes.
Sahota said: "People need to understand - when we consider planning applications for new homes, we are between a rock and a hard place. If these meet national and local policy we have no choice – we have to accept them.
Sahota said the secretary of state and planning inspectors have allowed development on greenfield sites "even when this is in an area of outstanding natural beauty, so even these cannot prevent the approval of new housing developments".
He added: "At a time when we must find £22 million of cuts by 2016 due the deepest cuts in local government grant in 70 years, we cannot risk public funds in such a way. It would be akin to a gambler putting all their life savings on a three legged donkey in very long field of thoroughbreds – the chance of success is virtually zero, the costs very high.
"We have no choice but carry out the instruction of government or face a very big legal bill. If people don’t like this they should take this up with their MP and the government, not the council."