Its report says areas to the north, east and south of Nottingham should all be deleted and the future green belt should be concentrated on preserving the gap between the two cities.
East Midlands Regional Assembly housing, planning and transport board chairman Jim Harker said the proposals are radical and very disappointing.
The panel called for 21,757 homes to be built per year, an increase from the draft figure of 20,418. However, it warned that further rises may be necessary if affordable housing delivery does not improve.
The panel, chaired by Stephen Crow, said it backed the general scale and distribution of housing development but has reduced the number of homes for coastal Lincolnshire pending additional work on flood risk.
The final RSS is set to be adopted by next autumn after consultation on the government's response.
The report is available at PlanningResource.co.uk/doc.