Last night, a full meeting of South Oxfordshire District Council decided to opt for "resolving issues in the emerging local plan" rather than withdraw or continue with examination of the strategy.
The council is now run by a Liberal Democrat-Green coalition after elections in May saw a change in control, while the local plan was drawn up by the previous Conservative regime.
The new council administration was elected on a platform of opposition to the local plan.
Last week, planning officers presented cabinet members with the options of withdrawing the plan or continuing to progress it – and recommended the latter option.
Instead, the cabinet voted to ask last night's meeting of full council to "ask officers to explore with Oxfordshire County Council, the Ministry of Housing, Communities and Local Government and Homes England options for protecting the HIF funding whilst enabling the council to address concerns about the current emerging local plan 2034 including (but not limited to) climate change issues and Oxford City’s unmet housing need".
Another recommendation was to "agree that as soon as practicable, alongside satisfactory progress being made on resolving issues in the emerging local plan, work on a subsequent local plan shall commence, strengthening climate change considerations".
Members backed the motions by 20 votes to 13.
The move came after an intervention by Ian Hudspeth, Tory leader of Oxfordshire County Council, who warned the district council that withdrawing the plan from examination would be likely to scupper a £218 million Housing Infrastructure Fund (HIF) award to support a proposed garden town at Didcot.
In a letter to South Oxfordshire, Hudspeth said: "The awarding of the bid by government was based not only on the development already committed, but also on some proposed allocations as set out in your officer’s report.
"The geographical area that will be affected by negative transport impacts from the failure to deliver essential highway infrastructure is wide, and spans district borders.
"The potential number of housing land supply sites that may be lost, should HIF infrastructure not be delivered, could be significant."
The HIF funding would provide the lion’s share of a planned £234m of improvements to deliver new roads and bridges to open up development sites around Didcot.
Hudspeth’s latest warning came two months after he warned the district that delaying examination of the plan would cast doubt on a separate £215 million housing growth deal agreed between central government and the six Oxfordshire councils.
Under the terms of the deal, all local plans in the county were to be submitted by April 2019.
Speaking to Planning after last night's meeting approved this option, David Bainbridge, planning partner at property consultancy Bidwells, said the Oxfordshire Growth Deal, as well as plans for the Didcot garden town, could unravel if the council decided to withdraw the plan from examination.
He said that time was against the council, as the HIF deal needed to be signed by September.
Bainbridge added: "It's too simplistic to see this as local communities rising up against the plan.
"Representatives of parish councillors and Didcot Town Council spoke in favour of the growth plans at last night’s meeting – they welcome the investment of money and infrastructure."
An Oxfordshire County Council spokesman said the authority "will continue to work collaboratively with South Oxfordshire District Council and partners", following last night's meeting.
He said: "The government's award of HIF funding, for essential highway infrastructure, is critical for all residents in Oxfordshire. The county council therefore wants to ensure that HIF and other funding is protected whatever the progress is with South Oxfordshire’s local plan."
The South Oxfordshire local plan was submitted at the end of March after months of delays and heated discussions over housing targets and site allocations.
The submitted plan proposes delivery of of 22,775 new homes up to 2033 and allocates 37.5 hectares of employment land.
In May, Lib Dem Sue Cooper, who was subsequently named as council leader, told Planning that a group would be established to review the plan with a view to assessing whether the proposed level of growth in the document is necessary.