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.
A second inquiry into the future of people living in holiday chalets all year round in East Yorkshire has begun.