About 76 properties at Lakeminster Park, near Beverley, were granted planning permission as holiday homes.
Retrospective permission for people to live there all year-round was refused in 2012 by East Riding Council.
That decision was upheld at an inquiry in 2013 but an error by a planning inspector meant the government ordered a new inquiry.
The planning inspector had failed to take into account the National Planning Framework.
East Riding of Yorkshire Council said its refusal of planning permission and enforcement notices remain in force.
More than 120 people will no longer be able to live in the chalets permanently if the fresh inquiry rules in the council's favour.
The new inquiry is expected to last up to 12 days.

Paul Thomas, from Telford, was jailed for 10 years in April for the manslaughter of his son Oliver Sargent.
Oliver's mother Ashlea was convicted of causing or allowing his death.
The infant could have been removed from his home had the abuse been recognised earlier, the review concluded.
Oliver's parents, whose relationship was described in the report as "unstable", took him to the Princess Royal Hospital in Telford on four occasions.
He was was seen by a number of doctors there and one questioned if the injuries could have been non-accidental, but another, a consultant, accepted Oliver's mother's claim that he was a "very active child who rolled on to toys".
The report, which refers to Oliver as Child B, stated: "Although there is no guarantee, there is a probability that had health professionals been clearer in recognising that there was no plausible explanation for the injuries, Child B would have been subjected to child protection procedures and consideration given to protecting Child B by removing them from the home.
"Health professionals were in a position to raise concerns when Child B was observed to have bruising and occipital swelling.
"The parents either gave no explanation for the bruising or the explanation was questionable."
Oliver died in hospital on 27 July 2012, five days after sustaining a skull fracture during an assault. His injuries were consistent with shaking.
He was not previously known to social care services or police, the report said.
Jurors at Birmingham Crown Court were told at his parents' trial that Oliver had injuries consistent with a 40mph car crash.
A post-mortem examination showed he had 13 separate marks on his body and face and had been subjected to at least one impact to the left side of his head.
Further medical investigations discovered historical injuries, including two fractured ribs and a broken collarbone, all of which had healed.
Paul Thomas was acquitted of murder but convicted of manslaughter, while Ashlea Thomas was cleared of both murder and manslaughter. She was given a two-year jail term, suspended for two years, for causing or allowing her son's death.
The report set out a number of recommendations for agencies.
It said Shropshire Community Health Trust (SCHT) responses to bruising seen in young children must be improved, consideration should be given to seeing a child's father and injuries should not be seen in isolation, but considered with other concerns.
In cases where a child has life-threatening injuries out of office hours, senior managers of children's social care should be alerted.
The review noted poor quality in recording of injuries at Princess Royal Hospital and a lack of consideration of previous admission and/or injuries.
Andrew Tapp, from the Shrewsbury and Telford Hospital NHS Trust, described Oliver's death as "tragic" and said a number of changes had been made.
"Among these changes, any incident where there is the suspicion that injuries may be non-accidental is recorded using a body map to show the position of the injuries, along with measurements and full details.
"A system has also been established to ensure clinical photographs are taken 24-hourly on the children's ward. This improved recording of injuries ensures a more timely referral to social care should the situation arise.
"Should there be any difference of opinion between doctors about the nature of a child's injuries, the opinion of a dedicated named or designated doctor, who specialises in child protection, is sought."
Andrew Mason, of the Telford & Wrekin Safeguarding Children Board, said GPs are now referring more people when there is evidence of bruising.
"We are confident that message has got across," he said.
A second inquiry into the future of people living in holiday chalets all year round in East Yorkshire has begun.
[NEXT_CONCEPT]
Health professionals missed "several opportunities" to safeguard an 11-month-old boy before he died of a skull fracture inflicted by his father, a serious case review has found.