West Sussex, a largely rural county dominated by the South Downs and dotted with historic towns such as Chichester and Arundel, is seeking to overturn a decision by the Deputy Prime Minister and Secretary of State for the Environment that it must build an extra 12,800 houses over the period 1994 to 2011.
Mr Prescott told the county last December that its proposed figure of 37,900 new houses was insufficient, and that it must be increased to 50,700.
The council fears that most of the extra housing would have to be built on green-field sites and would greatly damage the countryside. "We're not an industrial county and we simply don't have that many brown-field sites," said a county council spokeswoman.
Mr Prescott ordered West Sussex to increase its figure despite the fact that the independent panel which examined the county's structure plan agreed with it, and that West Sussex's own total was based on a pioneering environmental capacity study, which said that further housing growth would be very detrimental.
"We carried out the study to ensure that the beauty of West Sussex countryside was preserved for generations to come," said Harold Hall, chairman of the county council's strategic planning committee. "This has now been threatened by the extra 12,800 homes that we have been told to find sites for.
"This is a major national issue which transcends party politics and the whole country will be waiting to see whether our application succeeds."
Ian Elliott, the county council chairman, said: "The county council has been united on this issue and thousands of people have signed petitions and have written letters objecting to John Prescott's direction."
Mr Prescott and his officials made their decision more than two months before the Government's February U-turn over its attitude to new housing in the countryside - largely under pressure from the campaigners who organised the countryside march in London - when it accepted the case for building 60 per cent of new homes on brown-field sites.
Tim Yeo, the Conservativeenvironment spokesman, said: "If the change of policy which Labour announced in February on new homes in the countryside has any meaning at all, Mr Prescott should give way 100 per cent to the county council on this issue."
Yesterday the county sought judicial review of Mr Prescott's decision on the grounds that he was failing to comply with planning guidance. The case, which continues today, is being heard by Mr Justice Scott Baker.
Simon Festing, housing campaigner for Friends of the Earth, said: "The issue is, is it right for Mr Prescott to sit in his office in London and rule, down to the last hundred, exactly how many houses every county has to build?"
Mr Prescott's predecessor, John Gummer, the former Tory Secretary of State for the Environment, has submitted an affidavit supporting the stance of West Sussex.