The application, submitted by Dieter Nelson Planning Consultancy, proposed the homes for land off Legbourne Road on the outskirts of the town.
Planning approval was sought for a number of two storey homes on the site with a single entrance to the development also proposed.
Despite the land being allocated for housing under the recently adopted local plan, Louth Town Council objected to the proposal saying it would impact on the landscape in the area.
Councillors on the authority recently approved its Local Plan which will require the council to build 7,819 houses over the next 13 years.
Consent has already been given to 1,257 developments on the coast and 3,118 inland in the region.
But 3,810 homes still need to be built - with 1,204 homes needed in Louth.
Applicants D. Nelson Planning said that the approval of the residential development in the town will help with the supply of housing.
In a design and access statement, they said: “The development proposal will aid the council to deliver a mixed housing development within a sustainable location, with access to essential key services and facilities.”