Council chiefs are considering a legal challenge after developers won their appeal against a decision to block plans for dozens of new homes in Gayton.
A government planning inspector backed proposals for up to 50 homes on land off St Nicholas Close last month.
The ruling overturned West Norfolk Council’s decision to reject the application in March 2016.
But the authority has now confirmed it is taking legal advice over the scheme.
In a report to this Thursday’s full council meeting, development portfolio holder Richard Blunt said: “It is considered that there are legal issues with the decision that if left unchallenged, could have implications for the rest of the borough.
“The council is therefore currently taking legal advice about challenging the decision through the courts.”
In his report, planning inspector Cullum Parker endorsed the council’s position over whether the borough has adequate supplies of housing land.
But he said the application should be allowed to proceed, even though the site is outside the village’s settlement boundary and therefore contradicts planning guidelines.
He said: “In this case, there would be a technical breach of policy. However, I have not found any harm that would arise from the proposal.”
He ruled the plan was a “windfall” scheme that is permissable under the borough’s framework for future housing development.
Conditions were also imposed requiring the developer, New Hall Properties (Eastern) Ltd, to maintain a “landscape buffer zone” to mitigate the effect of the development on the nearby St Nicholas Church, which is a Grade I listed building.
But Mr Blunt suggested the confirmation of sufficient land supplies was insufficient for the decision to be accepted.
He wrote : “The inspector has nevertheless allowed up to 50 dwellings outside of the village development boundary, setting aside well-established policy.”