The dispensation was proposed by councils as part of the Oxfordshire Housing and Growth Deal, agreed with the government in March, in order to help them control speculative development and allow them to focus on preparing a joint statutory spatial plan (JSSP).
Under the growth deal, councils have agreed to produce the JSSP by 2021 to support the delivery of 100,000 new homes between 2021 and 2031.
In return, the government has agreed to provide £150 million for infrastructure to unlock housing sites, to be paid in £30 million instalments over the next five years, plus £60 million for affordable housing and £5 million to boost plan-making capacity.
In a written statement to Parliament on Wednesday, housing secretary James Brokenshire said the lower housing supply pipeline would be in place across the county until the plan is adopted in 2021.
He said: "We have ... agreed to provide a short term flexibility which will support the delivery of the local plans for the area and ensure that the local authorities can focus their efforts on their joint spatial strategy."
Brokenshire said the statement was now "a material consideration in planning decisions" and applied to all the authorities that formed part of the housing deal: Cherwell District Council, Oxford City Council, South Oxfordshire District Council, Vale of White Horse District Council and West Oxfordshire District Council.
He added: "I will monitor progress against these timescales and keep the planning flexibility set out in this statement under review."
Brokenshire said the government recognised that the adoption of the shorter pipeline would result in fewer permissions being granted under paragraph 11 of the NPPF, which introduces a presumption in favour of sustainable development on unallocated land in a local plan if councils cannot demonstrate a five-year supply of housing.
But he said the government "believes that it is important to support these ambitious plans that will deliver more housing in the longer term".
The new policy flexibility will not, however, apply to the NPPF’s housing delivery test requirement that imposes the presumption penalty on areas where the delivery of housing is less than 75 per cent of the local housing requirement over the previous three years, the minister said.
Councils subject to the relaxed rules will also be required to demonstrate a buffer above the three-year housing pipeline.
Roger Smith, planning director in the Oxford office of planning consultancy Savills, warned that the move "may impact on the level of new housing in the short term".
He said: "The approach will be closely monitored by other potential strategic planning areas.
"Other groups of local authorities are likely to seek a similar approach, whereby in return for supporting increased housing numbers, they receive more government funding for infrastructure and a reduction in the required level of housing land supply."