Planning inspectors have singled out land south of Grenoble Road in Oxford as ripe for a 4,000-home housing development.

Last night's revelation effectively ended years of speculation over whether Green Belt land in Greater Leys could be used for housing.

The news was welcomed by Oxford City Council, for whom this is seen as another partial solution to a chronic housing shortage, but those in South Oxfordshire, where the land is, were left seething.

Planning inspectors have in essence overturned rulings made by Oxfordshire County Council and the South East Regional Assembly by recommending an urban extension.

Andy Boddington, Oxfordshire campaign manager for the Campaign to Protect Rural England, said: "The impact of the report will be to severely damage the rural character of the centre of the county.

"We are rapidly moving towards two Oxfordshires - an urban Oxfordshire based around Oxford and Abingdon and a rural Oxfordshire."

The number of houses to be built in Oxfordshire by 2026 has been increased from 47,200 to 54,600 - with more than half that difference probably going on land off Grenoble Road.

Chris Lake of Marsh Baldon, which would neighbour any development on Grenoble Road, said: "The Government is not playing fair. We have had two examinations in public, which we won fairly and by the rules.

The inspector's report also declared Oxford a 'centre for significant change' because of its potential for significant growth.

Oxford East MP Andrew Smith said: "It is good news for everyone concerned about local housing that this independent report backs homes at Grenoble Road.

"Everything must be done to make sure the development is well designed and includes a good share of social housing and shared-equity homes so local people can get a foot on the property ladder."

Oxford City Council's chief planner Michael Crofton-Briggs said: "There is a desperate need for housing in and around the city and the panel have indicated there should be an increase of 4,000 homes in an area on the southern edge of Oxford.

"I welcome this important announcement for the city."

Mr Boddington added: "The planned urban extension into the Green Belt is the first stage in eroding the gap between Oxford and surrounding settlements.

"This intrusion into the countryside is likely to be the first of many."