An inspector with An Bord Pleanála recommended against giving planning permission for a 64km stretch of dual carriageway that will form part of the dual carriageway between Waterford and Dublin.
The board last week approved the southern section of the N9/N10 dual carriageway from Powerstown, Co Carlow to the Waterford by-pass.
The inspector, Daniel O'Connor, said the new road would have little impact on the reduction of traffic flows on existing roads close to Kilkenny city.
He questioned the rationale of building the nine-kilometre stretch from Dunbell, north of Kilkenny city, to Danesfort, which is to the south.
He also said that following the completion of the carriageway, adjacent roads would have higher volumes of traffic and would experience lower levels of service, while the carriageway would have exceptionally low traffic volumes.
Mr O'Connor said it was difficult to see how future traffic flows could be distributed without extensive works that would have high levels of impact. If the carriageway went ahead, he predicted there would be high levels of traffic on the Kilkenny city ring road and large amounts of residual traffic on the main road between Paulstown and Kilkenny and Kilkenny to Danesfort on the N10.
Cllr Pat O'Neill (FG), a member of the Bennettsbridge Road Action Group, said his group had been vindicated by the inspector's report but had been let down by the appeals board.
"We are not against the new road, but this is a complete waste of money.
"We will be left with a nine-kilometre stretch of motorway from Dunbell to Danesfort that no one will use."
Fine Gael TD Phil Hogan, said: "The decision by An Bord Pleanála is very disturbing on such a large piece of infrastructure." He said the inspector's report "undermines the credibility of the consulting engineering firms and the NRA in coming to their conclusion on traffic volumes on the proposed route."
The most serious impact of the report, he said, was the statement that the present low-volume section of the proposed carriageway between Danesfort and Clara, via Bennettsbridge, would have no benefit whatsoever to the economic and social development of Kilkenny city.
"The last thing that Co Kilkenny needs is a new motorway that will operate as a bypass of the city and county of Kilkenny between Dublin and Waterford, rather than an essential piece of infrastructure that will enhance our economic development into the future," he said.