Members decided to object after an extraordinary meeting of the council, at which residents expressed concerns.
The proposal is to build nine houses, with an access road, on land between Skipton Road and the Embsay Steam Railway banking.
Council chairman Coun Gill Quinn said: “The parish council had expressed concerns about a previous application for this development, which was subsequently withdrawn.
“This time members were impressed by the well-researched arguments and concerns expressed by residents living near the proposed development.
“There were several major concerns, including that the houses are to be built on essentially a flood zone, as the natural lie of the land was under water.
“Concerns were also expressed about the applicants’ flood-risk assessment, further sewage and drainage problems and the impact of the development and proposed flood-risk measures on the existing problem of insurance cover for residents.”