Planning inspectors are currently reviewing Shropshire Council's local plan – a document which sets out where a combined 30,800 homes would be built up until 2038.
They will decide if the proposal goes ahead as it is, or if it must be changed.
First they will hold hearings in January which could determine one of the most controversial elements of the document.
Shropshire Council rejected a bid to include Green Belt land near Tong, north of Junction Three of the M54, in the plan.
The Bradford Estates, which owns the land, wants to build up to 3,000 homes there, as well as providing significant space for commercial development.
The council's rejection has been challenged by the Bradford Estates, while ABCA – the Association of Black Country Authorities – made up of Walsall, Wolverhampton, Dudley and Sandwell councils, has also asked Shropshire to provide space for thousands more homes to meet their own shortfall.
ABCA questioned whether Shropshire Council was fulfilling the 'duty to co-operate' rule – national guidelines which mean authorities have to help neighbouring councils where they do not have enough space for housing or business development.
However, since ABCA's objections were put to inspectors the councils involved in the group have fallen out over their own 'Black Country Local Plan', scrapping the proposal, with the individual councils now having to draw up their own plans.
It is yet to be revealed how the change may affect the request to Shropshire, which had come from the body representing all four councils.
Ahead of meetings in January to discuss the 'duty to co-operate' measures it has now emerged that Shropshire Council's planning policy and strategy manager, Eddie West, has written to the planning inspectors highlighting the collapse of the Black Country Plan.
He said: "Following recent discussions between the four local authorities covered by the Association of Black Country Authorities (ABCA): Dudley, Sandwell, Walsall and Wolverhampton, it has been decided that plan preparation work on the Joint Black Country Local Plan will cease immediately. Instead, each Council will develop its own Local Plan to a timescale to be agreed by each authority."
He added: "We are aware you are currently preparing Matters, Issues and Questions (MIQs) into the upcoming virtual hearing session scheduled for 17th January 2023 in order to discuss the recent evidence provided by the Council and. It is acknowledged this recent news regarding the Black Country Plan may be relevant to these discussions."