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A chance for affordable housing, which is "in dire need," has been lost.
Sixteen flats are proposed to replace a former snooker club in Deal, but developers have now told Dover District Council planners it is no longer viable to include the affordable homes.
This is despite the authority's housing policy seeking 30% affordable accommodation in applications for more than 15 homes.
Council Labour leader Kevin Mills told KentOnline: "This is not acceptable and we need to change the planning process.
"Dover district is in dire need of social housing and we need to provide the right amount.
"We have 4,000 people on the waiting list.
"I accept there may be a problem of viability for developers but in an area like Deal where housing is expensive we especially need to provide affordable homes.”
Cllr Sue Beer, Labour ward member for the area, said: "Deal is just as badly off as Dover in terms of housing.
"I have dealt with people who cannot afford it here.
"Deal is a low wage but high cost area so people cannot afford to save money for homes.
"Some families cannot afford to live in Deal at all and have had to move out."
But Cllr James back, chairman of the council's planning committee, said: "Developers can produce viability statements for affordable housing and the figures are independently assessed.
"If they say they can't provide 30% we try to negotiate for example for 20%.
"We are caught between a rock and a hard place.
"But we have had situations where the council can buy the land from a developer and build its own properties.
"This happened recently in a scheme for about 30 homes at Sandwich Road in Whitfield where it suited the developer to sell land to us for a nominal £1."
The former Royal Leisure Centre and Snooker Club, in King Street, once housed an arcade and snooker hall, although both were found to be financially unsustainable.
Now, MW Amusements wants to demolish the three-storey building and replace it with a four-storey block containing one and two bedroomed flats plus three shops on the ground floor.
But a letter to the council this month from its agents Harrison chartered surveyors said: "The results and conclusions of our economic viability appraisal confirms that the proposed scheme is not capable of viably incorporating any affordable housing units within the scheme."
It said the applicants could not even provide any contributions to off-site affordable housing.
The letter concluded: "It is therefore not possible to provide any affordable housing as part of this planning application."
The application had been submitted last October and a decision on it is still awaited.
A Dover District Council spokesman said: "The applicant has recently provided a viability assessment in respect of lack of provision of any affordable homes, which is currently being reviewed.
"The decision-making process will take all relevant planning policies into consideration."