McCarthy and Stone's application for retirement flats and four houses at 36 Stafford Street has been subject to complaints by Asda, which has a store with a delivery yard nearby and fears noise complaints from the new residents would affect its business.
The developer has submitted revised drawings including an acoustic fence but two Shropshire Council departments have now said that would not resolve the noise issue.
A letter from 24 Acoustics on behalf of the developer put forward alterations including a 3.6m high acoustic barrier and restricting the opening of some bedroom windows to 100mm.
This week Shropshire Council's conservation and regulatory departments both responded.
The regulatory services department said the new design was "closer to achieving" the recommended standards but still fell short.
"Good acoustic design would require there to be no habitable rooms opening onto noisy facades and/or habitable rooms and outdoor amenity spaces to be protected by noise barriers," it said.
"Achieving the recommended design criteria for all the residential units would require a substantial redesign of the site and potentially a reduction in the number of units.
"It needs to be considered whether this is likely to be achievable given the size of the site and the limitations due to the surrounding noise sources and various other restrictions that may apply to the site.
"In regards to acoustic design a lot can be achieved by designing layouts so that the building structures themselves act as barriers to protect the amenity of the habitable areas from surrounding noise sources.
"I am not convinced that these solutions have been fully explored."
The conservation letter said: "An acoustic fence as indicated in the location indicated is not acceptable and will cause harm to the character and appearance of the conservation area."