Inspector Harold Stephens said the County Plan, which will be the blueprint for development in County Durham for the next 20 years, was "unrealistic and flawed".
The council had wanted him to reassess his findings but he has refused.
The authority has now said it will take that decision to court.
Ian Thompson, the council's corporate director of regeneration and economic development, said: "It came as a disappointment that the planning inspector has declined to reopen the examination.
"We maintain the plan offers the best prospect for economic growth and have explored every option and opportunity in our efforts to demonstrate this, which has included employing independent planning experts to review our business-backed predictions for growth.
"We now have no choice but to pursue this matter through the courts by way of a Judicial Review."
In the plan, the county council said it wants to build 31,400 homes and create thousands of jobs over the next 20 years, in a bid to attract more businesses and people to the area.
But Mr Stephens said the plan was "unsound" and assumptions about job growth were "very ambitious".

Joel Warwick also twice tried to kiss her and asked her to "bend over" a photocopier machine, the Health and Care Professions Council (HCPC) said.
He denied misconduct and said it was mutual flirting at an East Midlands Ambulance Service base in Lincolnshire.
The panel said his actions in 2015 were so serious it had to suspend him.
The tribunal hearing on 4 April was told that Mr Warwick had removed a pen from the 'V' of his colleague's blouse and squeezed her breast when he placed the pen back into her blouse.
On another occasion Mr Warwick told the complainant he "needed a hug".
He started working at the Spalding station in August 2014 and claimed both he and his colleague had "engaged in flirtatious behaviour".
In reaching its conclusion the HCPC said the panel acknowledged Mr Warwick was "of good character", with an "otherwise unblemished career".
It also accepted that he had apologised to the complainant shortly afterwards.
Panel chair Claire Bonnet said: "Mr Warwick had demonstrated limited insight into how his actions transgressed professional boundaries.
"His misconduct was so serious that the need to uphold professional standards and public confidence in the profession and the regulatory process would be undermined if a finding of impairment was not made in these circumstances," she added.

Thomas Bebbington, 22, from Shrewsbury, was last seen entering the river near the Dana Steps at about 19:20 GMT on 10 November.
A body was found by a member of the public on private land near Leighton, about 10 miles (16.09km) away from the centre of Shrewsbury, on Monday.
Mr Bebbington's family has been informed, West Mercia Police confirmed.

The man said he found the metal object floating on a remote river in the municipality of Salinopolis.
The debris has been confirmed as coming from a satellite launched from the Kourou base, in neighbouring French Guiana, last July.
The piece bears the logo of the UK Space Agency and Arianespace - the European satellite company.
A spokeswoman for the UK Space Agency, Julia Short, confirmed that the debris was from the launch of Europe's largest telecommunications satellite last year.
"It is the launch vehicle payload shroud from the Alphasat launch last year. It probably landed in the Atlantic and then floated inland,"
Alphasat, described as Europe's most sophisticated telecommunications satellite, was launched from the Kourou base on 25 July.
Brazilian authorities in northern Para state said they would contact the UK Space Agency and ask them to collect the object.
According to local reports, it took more than 10 people to retrieve the panel from the riverbank.
"It is big, the size of a car," local resident Gilson dos Santos told O Globo.
Residents have been told to report immediately any symptoms of illness, but rescue teams do not believe the wreckage is radioactive.
The local fisherman who came across the unusual catch - 73-year-old Manuel Alves dos Santos - said the authorities initially did not believe him.
"It hit my fishing line and I pushed to the bank of the river to see what it was. It is the first time I see something like that," he told O Liberal newspaper.
The object was found on Saturday night, but according to residents the authorities failed to respond to their initial calls.
Recovery teams only arrived in the area after the finding was reported in the media.
Durham County Council is seeking a judicial review after a planning inspector refused to re-examine his criticism of proposals for the county.
[NEXT_CONCEPT]
A paramedic has been suspended for eight months after he squeezed a colleague's breast and inappropriately touched her bottom.
[NEXT_CONCEPT]
Police searching for a man who went missing last month have found a body on the banks of the River Severn.
[NEXT_CONCEPT]
A fisherman in Brazil's Amazon region has found a large piece of debris from a European space launch.