In a statement last week, Aylesbury Vale District Council said it would no longer contest a legal challenge made by developer Lightwood Strategic to the Haddenham Neighbourhood Plan, which was adopted in September 2015.
The case was due to be heard at the High Court on Wednesday, but the council said that it had consulted its barrister about the impact of evidence submitted by the developer last month and the prospects of the case being won.
"On the basis of that legal advice, the council has, regrettably, decided that the best interests of the council would be served if it ceases to contest this case," the statement said.
The council said that the decision to withdraw from the legal challenge "will mean that the housing policies in the Haddenham Neighbourhood Plan will then be quashed and removed".
Lightwood Strategic director Philip Chichester said in a statement that there were "serious errors" in the scoring system used to allocate areas for development in the neighbourhood plan and that it had also failed to reflect Aylesbury Vale’s strategic housing requirement for the area.
"Lightwood fully supports the principle of good neighbourhood planning, and we are working with many communities to help them prepare robust plans," Chichester said. "But when there are fundamental flaws in a plan it is only right that they are appropriately challenged and addressed."
The developer has submitted an application for land at Haddenham, which is subject to a public inquiry.
In a statement, Haddenham Parish Council said that the council’s decision to withdraw from contesting the legal challenge "is hugely disappointing for the parish council and the volunteers who put so many hours into the preparation of the plan".
The statement added: "The future of neighbourhood planning being undertaken by volunteers in their communities appears to be under threat if they cannot be protected by the bodies that are there to support them through the process and beyond.
"Neighbourhood planning is now likely to turn into a costly process that is carried out by professionals for those communities with sufficient funding and will be beyond the reach of smaller communities.
"This surely goes against the principles of localism on which the neighbourhood planning policy was founded."
Aylesbury Vale District Council’s cabinet member for growth strategy, Carole Paternoster, said: "It is very regrettable that we have to take this step but we have to act in the best interests of Aylesbury Vale overall.
"This decision should not be seen as a lessening of the authority’s support for neighbourhood plans generally, as the exact circumstances of this case are very specific to the Haddenham Neighbourhood Plan."
The council said it will continue to assist the parish council to renew its plan as soon as possible.
"It will also be reviewing what other measures may need to be put in place to ensure that the chances of such errors occurring again with other neighbourhood plans are minimised."