The plan to have a new primary school built on the proposed Holbeach West development has been dropped.
Instead, two existing primary schools could be extended to accommodate more pupils.
Holbeach Primary Academy has already lodged an expression of interest, and Lincolnshire County Council says William Stukeley Primary School could also be made bigger.
Holbeach county councillor Nick Worth said: “It makes sense. Why spend money on a new build when you can just expand a current one?
“Both schools have got capacity to do more.”
The Holbeach West development is one of two proposed 900-home plans for the town. The other, off Fen Road, includes provision for a new primary school.
Plans for the first phase of the 45-hectare Holbeach West development have been lodged with South Holland District Council. Joint landowners Richard and Andrew Goodley and the county council want outline planning permission for 650 homes.
Planning agent Robert Doughty Consultancy said: “We intend to deliver a development that is sustainable and responsive to its surroundings to the benefit of Holbeach and the wider South Holland area.”
Holbeach district councillor Paul Foyster was first to lodge an objection, saying: “Proposed or agreed new housing projects in Holbeach, if completed, would nearly double the population of the town.
“This may be in a designated development area but recent approvals granted outside such areas, against all reasonable expectations, will already swamp infrastructure and services. District need to consider alternative housing sites elsewhere in South Holland.
“Holbeach has far more than our fair share.”
The Holbeach West plans are linked with the development of a neighbouring food enterprise zone and £4m of highways improvement, including two new roundabouts – one at Peppermint Junction (A17 and Welbourne Road South).