The B4373 Ironbridge Road in Jackfield remained closed today as investigations continued into the crater, which is around three feet wide and more than five feet deep.
Ironbridge Gorge is known for its unstable land and it is thought the wet weather caused land to slip and the hole to open up.
Debs Gate, from the Black Swan pub in Jackfield, said: "Customers have told us that a car almost went into the hole. It could have been terrible.
"We know it wasnt there at midnight o Christmas Day but had appeared by yesterday."
Telford & Wrekin Council spokesman Nigel Newman said: "A diversion for traffic has been set up via Calcutts Rd and the road closure will remain in place until further notice.
"The bad weather will have exacerbated the situation. We understand there was a car nearby when the hole opened up."
Flood defences were up along the River Severn in Bridgnorth today and water was being pumped away from vulnerable homes.
A flood warning remains on the Severn at the Showground and the Quarry in Shrewsbury. The status, the second most serious alert, covers Gravel Hill Lane and Sydney Avenue. The Frankwell car park and The West Midlands Show Ground is also at risk of flooding.
A flood warning also remains on the Lower Dee flood plain near the Shropshire/North Wales border, affecting the Farndon area.