The council said it was scrapping plans to build  5,000 homes just three days after submitting them in Core Strategy proposals.

The U-turn follows a letter from Eric Pickles, the Secretary for Communities and Local Government, who wrote to all local authorities telling them he wants to “rapidly abolish” regionally-set housing targets.

This gives the green light to local authorities to halt decisions on development plans and planning applications.

Oxfordshire had been expected to earmark areas for  40,680 homes by 2026. This included controversial plans to build 4,000 homes within the green belt to the south of Oxford, which have now been dropped.

HBF chairman Stewart Baseley said: “South Oxfordshire’s announcement demonstrates the urgent need for clarity on housing planning policy.

“Scrapping the existing system without a replacement is a recipe for disaster. We have an acute housing crisis in this country, approaching a shortfall of a million new homes.”

He warned: “We just cannot afford a period of confusion to reduce house building still further at a time when we are already building at the lowest level for many decades.”

“The Government says it is committed to delivering more homes, but without urgent guidance, this aspiration will not be achieved,” said Baseley.

Oxford East MP Andrew Smith has put a question in the Commons to Eric Pickles, asking about the “supply of housing in central Oxfordshire”.

Mr Smith said: “If, as reported, the coalition Government simply leaves the planning of housing to district councils, it puts Oxford in an impossible position.

“The city’s boundaries are so tight against the built-up area that there is wholly insufficient land within its control to plan and provide the housing the city desperately needs.”

House builders expected the Government to introduce a new planning system, but argued for a clear and robust transition plan that did not damage  the supply of much needed homes across the country.