The application by Powys County Council is to build the homes at the former livestock market at Gorn Road in the town and is part of the council's commitment to build 250 homes over the next five years.
Llanidloes Town Council has already said they back the scheme and want to see “local people” given the homes.
But the Welsh Government Highways Directorate said: “As highway authority for the A470 trunk road... planning permission is not granted at this time as the applicant has provided insufficient information to determine the application.”
The council is being asked to clarify what it would do to reduce noise on the eastern edge of the site boundary where the trunk road is.
Principal planning officer, Holly Hobbs, said: “The site is the former Smithfield depot building and livestock market, located to the north east of Gorn Road in Llanidloes.
“The site is located to the south east of the town centre, by the A470 which runs parallel to the eastern site boundary.
“The application site extends to approximately 0.63 hectares and gently slopes from east to west.
“The site currently comprises of an assortment of abandoned highway materials and equipment, old cattle pens and the derelict remains of the former British School.
“The majority of the suite is covered in hard-standing, however, there are some overgrown areas of vegetation.”
Ms Hobbs added: “Consent is sought in full for 22 affordable dwellings and to include an element of demolition.”
The plans are for an assortment of two to four bedroom homes built as bungalows, dormers and two storey buildings.
There will be some parking provided as well as an on-site area of open space.
Ms Hobbs adds: “Whilst the scheme proposes 100 per cent affordable housing, given that the site is located within the settlement boundary, it is not considered reasonable or appropriate to condition the scheme to this effect.
“Therefore, should members be minded to approve the development, it is recommended that the percentage of affordable housing is conditional to reflect the relevant sub-marked area which in this instance is North Powys – 10 per cent contribution.”
Ms Hobbs recommended the plans for approval with nine conditions attached.
In July this year, the council's housing department held a pre-planning consultation on the projects which included drop-in sessions.