County council area development manager Jenny Adamson said housing on the Vald
Birn site was in breach of policies in the Wansbeck Local Plan, which designated the area as a zone of economic opportunity.
Birn site is a mess at the moment and something needs to be done about it."
Birn foundry closed in April last year and has been out of use since then, with the loss of 157 jobs.
Birn's Danish parent company pumped millions into keeping the Cambois operation going, despite heavy losses.
GUTTED: The Vald
Birn factory in Cambois which was targeted by an arsonist.
Birn quality control inspector Mark Watson, of Ashington, said yesterday: "It's obviously a massive problem.
Birn UK made castings for the automotive, rail and other industries but the plug was pulled on the plant after its electricity bill rose in 16 months from pounds 1.2m to pounds 2.4m.
There is a rescue attempt at Circatex but Vald
Birn will close in April, partly because of a doubled electricity cost.
The knock-on effect has already been cited as a prime factor behind two North-East companies ( Circatex and Vald
Birn ( going into administration this month.
It has been followed this week by the Circatex announcement and the 150 redundancies at the Vald
Birn foundry in Blyth.
Bosses at Vald
Birn UK ( which has been in Cambois near Ashington, Northumberland for over 25 years ( say a 100pc rise in the cost of electricity is a major factor in the decision to close the plant in April.
NORTHUMBERLAND foundry Vald
.Birn has been boosted by achieving an important quality standard.