Hertfordshire council is preparing to mount a High Court challenge to John Prescott's plans to extend Stevenage into the green belt.

Last week the deputy prime minister gave permission for an application for 3600 dwellings proposed by the West Stevenage consortium but rejected an application for 5000 homes on the same site, which includes 300 ha of green-belt land. Both applications were lodged in 2001.

The West Stevenage consortium is made up of Taylor Woodrow, Persimmon and the Garden Village Partnership. In a letter from Prescott outlining the decision the minister said he could not support the 5000-home application on the land to the west of the A1(M) as it was not catered for in local authority development plans.

He said permission for the extra homes would have to wait until the outcome of a public inquiry into the regional spatial strategy for the east of England, which is due to begin next week.

But Prescott did allow a second application for a smaller number of houses, which had been lodged at the same time by the consortium, because Hertfordshire had provided for the dwellings in its 1998 structure plan. He said that breaking the embargo on the use of green belt land was justified by the area's housing need.

He also ruled that the consortium should enter into a section 106 agreement with local councils to provide infrastructure. He accepted the argument put forward by the councils that they could not ensure that the consortium would deliver on its undertakings over this issue.

Derrick Ashley, Hertfordshire's strategic planning member, said: "We are very disappointed by the decision and will now examine in detail the justification for his conclusions and consider the options open to us."

Prescott is prepared to undermine its own policies on the green belt

Henry Oliver, CPRE

A spokesperson said the county council was exploring whether it would go to the High Court to seek a judicial review of the decision. It performed a volte face over housing policy after the Conservatives gained control in 2000.

Henry Oliver, planning director of the Campaign to Protect Rural England, said that by approving the West Stevenage development, Prescott had thrown down the gauntlet to the east of England assembly. "He has shown that the government is is prepared to undermine its own policies on the green belt."

The consortium expressed disappointment that Prescott had turned down its larger application, but was pleased by the decision over the 3600-home scheme.

Project director Andrew Dutton said: "This is an important step towards the delivery of much needed housing in Hertfordshire. Our 5000-home scheme would have provided more than £180m of privately funded infrastructure investment. We will need to look carefully at what proportion of the investment can be delivered, and in what timescale, in relation to the smaller application."