Landowner Claire Engbers wants to build the homes on her land at Thames Farm, Harpston, near Lower Shiplake.
But she has faced fierce opposition from Shiplake Parish Council and local people.
They said the stretch of the A4155 is already extremely dangerous and that would only be made worse by the development.
A proposed pedestrian crossing near the village's war memorial would not be enough to safeguard road users, particularly children, they argued.
After an eight-day public inquiry, a planning inspector refused planning permission.
He said the development would have a "severe adverse residual cumulative effect on the safety and convenience of highway users".
But now Court of Appeal judges have confirmed that Engbers should have another chance to win planning permission for the scheme.
Lord Justice Lewison said the inspector had been "obliged" to respect residents' views about road safety and to take them fully into account.
There was, he ruled, no "procedural unfairness" in the inspector's handling of the case.
But the judge, sitting with Lords Justice Hamblen and Henderson, nevertheless ruled that his decision could not stand.
The inspector could have granted consent subject to a ban on construction starting until adequate highway safety measures had been agreed.
And he had given no adequate reasons for discounting that possibility.
The judges dismissed an appeal against an earlier High Court decision, quashing the inspector's decision.
The ruling means that Engbers' bid for planning permission must be considered afresh by the Department for Communities and Local Government.
Secretary of State for Communities and Local Government & Anr v Engbers. Case Number: C1/2015/3556