The inspector's draft report for Pool-in-Wharfedale under the Leeds Urban District Plan (UDP) could see the village increase in size by up to 40 per cent.
Pool contains several key sites earmarked for development, including the controversial Swallow Drive housing bid, which the UDP inspector has approved.
The application to build homes on the green belt land has been opposed by residents, who say village facilities and roads cannot cope with the increased population.
But in the draft report the inspector recommends that a second access off Arthington Lane, with arrangements to prevent 'rat running' through the estate, would cope with extra traffic.
But he says the main road - the A65 -- would approach its maximum capacity very quickly: "The only satisfactory long term solution is a western bypass together with some improvements on Arthington Lane."
"It seems equitable that all sizeable new developments should contribute to necessary highway improvements throughout the village, not simply those in western Pool."
Such improvements along Arthington Lane would include widening at 'pinch points', and traffic lights at the White Hart pub.
The inspector also recommends any housing development be phased over longer periods to the developers, the village and its infrastructure.
Infill building is approved between existing developments along Arthington Lane at Penrith and Reivers, and Brooklea and Fairfield.
The UDP inspector does not consider this to be out of character with the village, which, he states, is not an historic town, rather containing a series of small modern housing estates.
A major cause for concern among villagers is the future of sand and gravel extraction at Midgley Farm - also approved in the draft report.
Extraction could take place up to the year 2006, but the inspector does say HGV traffic should be directed towards Otley and not through Pool by including legally enforceable conditions in any planning approval.
Pool Parish Council is considering the various proposals in the draft report, which will be discussed in detail at its meeting next Monday.
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