The application, submitted by Gleeson Developments to Arun District Council was called in by the secretary of state in September last year.
According to the inspector’s report, the development plan for the area comprises the saved policies of the adopted Arun District Local Plan 2003 and the made Yapton Neighbourhood Plan.
The report said that the council had resolved to grant planning permission for the scheme and had accepted that its relevant local planning policies were out of date and that there had been a "persistent undersupply" of housing in the area.
A decision letter issued on behalf of Sajid Javid this week said that the minister agreed with the inspector’s recommendation that the application should be approved.
The letter said that Javid considered that the proposal "would make a significant contribution to housing and affordable housing in the district, where housing shortage is severe".
The letter said that the secretary of state agreed with the inspector that the proposal conflicted with paragraph 198 of the National Planning Policy Framework, which states that where a planning application conflicts with a neighbourhood plan that has been brought into force, "planning permission should not normally be granted".
However, the letter added that, like the inspector, Javid considered "that the circumstances are not normal because of the severe housing shortage … He considers that this conflict therefore carries limited weight".
Javid also found that the proposal would bring economic benefits by creating jobs during construction.
Applying the National Planning Policy Framework’s (NPPF) presumption in favour of sustainable development, the letter said that Javid found that there were no specific policies in the NPPF which would direct that the scheme be refused.
In October 2016 Javid overruled a planning inspector's advice and refused a separate 100-home development in the village because of policies contained in the neighbourhood plan.