Developer Duddingston House Properties has submitted revised plans for a proposed 147-bedroom hotel including new extensions to the original building, which was built between 1825 and 1829.
A report to the council’s development management sub committee, which will vote on the proposals on Thursday, praised the quality of the architecture, but said the scheme was unsuitable for the site.
It said: "While in general the development would accord with principles on accessibility and would have an economic benefit, these benefits are not outweighed by the harm to the historic environment."
Planners said the plan would have adverse impacts on the character and setting of listed buildings, the city’s New Town conservation area, the landscape of Calton Hill and the city’s World Heritage site.
"Put simply, too much building is being proposed for this highly sensitive site," the report concluded.
Adam Wilkinson, director of conservation charity Edinburgh World Heritage, told Planning: "The planners have produced an exemplary report and we commend the work they have done.
"It has been very hard for them as they have been under a lot of pressure to allow the scheme by economic interests."
He said that if councillors ignore the planners’ recommendations and overturn the scheme "it would send out a very clear message about what this city thinks about its built heritage."
The scheme is perhaps the most high profile of a number of applications which have caused controversy in the Scottish capital in the last year.
In September, the UK committee of the International Council on Monuments and Sites (ICOMOS) launched a probe into the effect of recent planning decisions on world heritage assets in the city.
Its report, seen by Planning, recommends greater clarity around the roles of outline and detailed permissions, as well as calling for design briefs to be prepared by councils independently of developers.
The body’s worries were sparked by concerns over the Royal High proposals, along with the decision by councillors to ignore planners recommendation and approve plans for a new hotel by developer TH Real Estate at the east end of Princes Street.
Earlier this month, councillors voted to approve a scheme incorporating part of the former headquarters of the Royal Bank of Scotland despite a formal objection from heritage watchdog Historic Scotland and protests from local resident and conservation groups.