At an executive committee meeting this week councillors heard that the council is required to build 520 new homes this financial year.
Developers will find it easier to appeal against refused applications should the council fail to meet this number, which has 'never, ever' been achieved, according to the leader of the council, Councillor Sean Woodward.
He said: 'It is a sobering report.
'And when we're looking at the figures we're expected to deliver, which we have never, ever delivered - it shows the absolute bizarre nature of the planning system.'
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Councillor Fred Birkett, executive member for housing, said: 'We're really over a barrel in everything we do.
'We can approve as many planning applications as we like - but if developers don't want to build them, they won't build them.
'Yet we, as a council, will be penalised - it's absolutely bonkers.'
The report to the council comes as it looks to finalise its Local Plan, the document that outlines development in an area over the next 20 years.
The council had to rip-up its draft Plan last year after the Government announced revised housing targets.
Residents will be consulted on the issues and options facing the council, with a letter highlighting potential areas for new homes.
This includes land around Locks Heath, Meon Valley, the new town of Welborne, west of Portchester, and between Fareham and Stubbington.
Some councillors believe that the consultation is not 'deep enough' when it comes to addressing the issue, according to Councillor Shaun Cunningham.
He said: 'I think the consultation is not enough - it's wishy-washy.
'I think the council has areas that are their preference and should be honest about it.
'Otherwise the public sees right through it.'
The consultation process will begin with a special issue of Fareham Today, the council's newsletter, which will be sent to every resident at the end of June.
Residents will have until July to comment.