Work on the village is expected to begin in early this year, with the first residents expected to move into their homes by the summer.
Residents will stay for up to 15 months each and live in a “managed environment” where they can learn new skills.
However concerns have been raised that the innovative village could “hinder” the homeless community.
Dr Beth Watts, a research fellow at Heriot Watt University, Edinburgh, who specialises in social policy, has warned that “good intentions are not enough”.
Dr Watts said: “One of the reasons it has received so much praise is the idea that is very innovative.
“But while it is innovative in some ways, it replicates things that have been going on for many years – namely concentrating people together on the edge of the city in an institutionalised environment.”
She continued: “Evidence from around the world suggests that homeless people should instead be moved directly to permanent accommodation in mainstream neighbourhoods.
“We know a lot about what works and we have to take heed of those lessons. Good intentions are not enough, altruism must also be effective.”
The Rock Trust, which works with young people between the ages of 16- 25 in Edinburgh have backed the comments made by Dr Watts.
Chief executive Kate Polson has said that long term investment is the most important issue.
She said: “At the moment there are 400 homeless people living in B&Bs across the city. There is no permanent accommodation for them with no alternative to the B&Bs, what is really needed is affordable housing.
“I can understand why something like the village seems more appealing because it means more beds, but the problem is what happens after.
“I believe they can stay in the village for up to 15 months which might be realistic for being able to find affordable housing but what we really need is long term investment in tackling the problem.
“The goal has to be to house people within communities and support them to live there.”
However, Mr Littlejohn has defended the new project, citing Social Bites experience of working with homeless people.
He said: “The plan to build a village for the homeless is based on our five years of working with the homeless in the context of providing food, employment and opportunities and support.
“The project plans to create a highly-supported environment, totally geared at breaking the cycle of homelessness.
“Far from being isolated, it will provide integrated links into mainstream employment and support into traditional housing after a 15 month period.
“Many of the people involved have worked in the sector for a lifetime.”
Mr Littlejohn, co-founder of the Home restaurant in Edinburgh which employs homeless people has been awarded an MBE for charitable works in the new year’s honours list.
The entrepreneur who has just returned from a trip to Italy, whilst visiting a similar project, continued: “We welcome all feedback, input and support as at the end of the day we all want the same thing, but I do feel that Beth’s article was written without knowing – or asking for – any of the finer details of the project, which is a shame as we would have been more than happy to have a meaningful discussion and take her views onboard.”