Sean Woodward, chairman at the Partnership of Urban South Hampshire (PUSH) - which comprises 11 local authorities - and leader at Fareham Borough Council, said he believed consents for 10,000 homes are currently in limbo.
PUSH recently wrote to the Ministry of Housing, Communities and Local Government (MHCLG) to request that the department's new housing delivery test be suspended until the issue can be resolved.
Woodward said PUSH is working with government agency and statutory consultee Natural England to see if an acceptable approach to mitigation can be found but that, for the time being, the planning system in south Hampshire has "ground to a halt".
According to Woodward, all 11 PUSH authorities are unable to grant consents in light of Natural England's advice
"The irony is we have MHCLG saying build big or be penalised and then you have the Department for Environment, Food and Rural Affairs (DEFRA) saying stop building," he said.
"Councils can’t build houses, they can only issue planning permissions and for the time being we can’t even do that."
Natural England recently issued revised legal guidance, in the wake of European Court rulings, that planning permission should not be granted unless developments are nitrate neutral.
According to minutes of a PUSH joint committee meeting earlier this month, a representative from Natural England advised that it is "difficult to permit additional nitrates into an already failing system". It added that councils "must satisfy themselves there is no impact from new houses" and "decide the level of risk from permitting development".
Woodward said Fareham Borough Council has suspended planning committee meetings due to a lack of applications that meet the nitrate neutral requirement.
"Natural England is a statutory consultee," he said. "We have counsels’ opinion from a number of authorities that says unless you have nitrate neutrality you will be judicially reviewed."
Portsmouth City Council said it has "temporarily ceased granting planning consent for additional dwellings" as well as "tourism related development".
Suella Braverman, the Conservative MP for Fareham, raised the issue in the House of Commons this week.
"Planning applications that could deliver hundreds of new homes in Fareham are in limbo," she said.
"Will the government work with me to look at suspending house building targets while affected councils work to find a solution to avoid being unfairly treated at potential appeals?"
Jake Berry, parliamentary under-secretary at MHCLG, advised Braverman that he believed the housing minister was "already looking into this issue".
A spokesman for Natural England said: "Around the country we work closely with developers and councils to support developments so they can help to protect and, in many cases, help to improve the natural environment. However, it is for the local planning authority to grant or refuse planning permission."
MHCLG was approached for comment but had not responded by the time of publication.