The government quango claimed that local authorities are failing to 'cope' because their planners do not have the relevant knowledge to do their jobs properly.
Crucially, the report recommends scrapping the government's 13-week performance indicator for planning departments.
It also advises that councils pursue innovative ways of plugging this skills gap.
Audit Commission chairman Michael Lyons said: 'There is a critical shortage of people with the right skills in planning departments.
'Councils must think creatively to ease workload pressures.'
Suggested solutions for councils include using private firms to take on mainstream planning work like processing applications.
The commission's research also recommended 'other sources of innovation', including sharing resources and introducing 'rigorous pre-application processes'.