Proposals to build more than 300 homes on the former Rover site at Longbridge have been stalled because councillors claim the land might still be suitable for job-creating industry.
Birmingham City Council’s planning committee voted to put off the housing scheme from developer St Modwen, even though plans for access roads were given approval.
There has been a fractious history between the planning department and St Modwen over development of the site.
Coun Barry Henley (Lab, Brandwood) was concerned about giving up industrial job creation land for housing and called for a report into the overall development rather than a drip feed of smaller planning applications.
But Conservatives said housing was included in the Longbridge Area Action Plan and that holding up the development would hand St Modwen a trump card in future negotiations.
Concerns that the proposed housing would be too close to the MG Motor UK factory and may prevent its expansion were dismissed as the committee was told the firm had raised no objections.
Coun Henley said: "We [already] have one very nice FE college and two office blocks. This is employment land, we should have more factories and offices before we get to housing.”
He called for a strategic site report to provide all details of housing and industrial development proposed.
Conservative planning spokesman Coun Peter Douglas Osborn (Cons, Weoley) said the Longbridge Area Action Plan included an agreement that some housing would be developed.
“The people in the area voted for it during the consultation," he said. "There is capacity for housing there.”
He added that the people had asked for a mix of mainly industrial and commercial sites with some housing thrown in.
The committee will receive a report next month before making a decision.