Government ministers have been urged to intervene in a saga which has left plans for thousands of homes in Norfolk in limbo.
Anxious council leaders have appealed to cabinet ministers Michael Gove and George Eustice to take action over the nutrient neutrality issue which has halted the award of planning permission for homes.
A letter signed by Norwich City Council leader Alan Waters, South Norfolk Council leader John Fuller and Broadland District Council leader Shaun Vincent, calls for the Natural England letter which sparked the situation to be withdrawn.
They say: "This intervention from Natural England could not have come at a worse time for, at the very moment Covid restrictions are eased and our focus is on growing the economy, the Greater Norwich authorities are not able to approve planning decisions."
They want levelling up secretary Mr Gove and environment minister Mr Eustice to instead give councils a year to get necessary measures.
And if ministers are not prepared to go that far, they are seeking special dispensation for "key regeneration proposals".
In the letter, they state: "We are at this very moment negotiating an ambitious devolution deal with government to help deliver
the levelling up agenda.
"However, we have been stopped in our tracks by disproportionate and counter-productive action by Natural England, which has taken us by surprise.
"It is our residents, business, communities, the people of Norwich and Norfolk, who will suffer as a result."
The issue has emerged as inspectors decide whether to approve the Greater Norwich Local Plan - a blueprint for where nearly 50,000 homes could be built in the next 15 years.
A question mark now hangs over that plan and the three leaders are urging a "pragmatic approach" to allow its adoption without need to demonstrate a five year supply of housing is in place.
The leaders state: "There is a substantial short-term risk development will be redirected to areas significantly further from Norwich city, the largest driver for growth in the area and the focus of substantial investment in infrastructure to support that growth agenda."
The letter singles out schemes such as Anglia Square, the regeneration of East Norwich (including the former Colman Mustard factory site) and plans for thousands of homes at Rackheath and Beeston Park near Sprowston, as potentially delayed due to the issue.
What is the nutrient neutrality issue?
At the end of March, government advisor Natural England wrote to Norfolk councils.
Councils were told they must not grant planning permission for any schemes involving 'overnight accommodation' within catchment areas of the Broads and River Wensum, until they could prove developments would not lead to more nutrients flowing into waterways.
That is because of concerns phosphates and nutrients could create algal blooms which harm aquatic species.
Melanie Hughes, director of sustainable development at Natural England, has said the body would help councils make assessments and come up with mitigation.
She said: "We recognise that nutrient neutrality won’t be easy to adopt in many cases."
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