The East Staffordshire Borough Council local plan proposes 11,648 new homes between 2012 and 2031, equating to 613 per year.
But inspector Brian Sims, in his interim findings, said the plan's sustainability appraisal was still subject to public consultation when the draft plan was submitted for examination, which meant the document was "strictly not legally compliant".
Such appraisals, which include strategic environmental assessments, "must be conducted at each stage of plan evolution at the earliest possible opportunity", said Sims, to show how "strategic options", including development site selections, were considered.
But he described East Staffordshire's appraisal as "deficient as a source of evidence in support of the [plan], both in respect of its technical adequacy and legal compliance".
Sims called for a "substantial revision" of the appraisal, which would "require significant further work".
Secondly, he questioned the relationship between the housing need evidence in the council's strategic housing market assessment (SHMA) and the borough's employment forecasts.
The SHMA predicts a housing requirement of between 596 and 630 dwellings per annum, of which the council chose a mid-point calculation of 613.
But Sims said this choice was "questionable" and the higher figure of 630, based on employment forecasts, should be the housing need figure.
This higher figure "assumes a return to pre-recession economic trends within the Plan period and accordingly more appropriately reflects the thrust of the [National Planning Policy Framework] to boost growth and housing supply", he said.
Adopting this higher figure would result in an overall increase of 323 units in the overall housing target over the plan period.
Sims said the authority also needed to provide further justification of the plan's housing need figure, adding: "On the evidence currently available it is impossible to conclude that the OAHN figure as put forward by [East Staffs] is adequately justified such as to provide a sound basis for the overall housing requirement."
In his third key area of concern, Sims said the way that sites with potential for more than 100 homes were initially chosen from the council's strategic housing land availabilty assessment (SHLAA) was "not transparent".
He also expressed worries about "an apparent reliance upon a relatively small number of large strategic sites" that "are likely to be comparatively slow to deliver the requisite amount of housing land".
The authority needed to clarify the site selection process and potentially increase the "range of sites to improve overall plan delivery". If further sites were required, Sims said, the "entire site selection process will need to be revisited".
He said: "Any disappointment or inconvenience to all those concerned is regretted but unavoidable in the circumstances."
Further hearings should be scheduled within six months, Sims added.
In a statement, East Staffs Council said there were "many positives in his report and significantly it appears that the Duty to Cooperate has been passed, which is generally a single point of failure for many local authorities".
It added: "The overall spatial strategy is essentially sound, so too is the affordable housing policy with modification."
None of the inspector's concerns "should stop the plan eventually moving forward to adoption", the council went on to say, adding that it believed it could "respond and resolve matters in a shorter timescale" than six months.
More details on the examination can be found here.