There are currently proposals to build to the west of Stafford which could see the old Newport to Stafford line intercepted.
Telford & Wrekin councillor Eric Carter is trying to persuade officials at Staffordshire County Council not to allow the bid, which could threaten any hope of restoring the route as a railway in the future.
Earlier this month Borders railway in Scotland laid the final link in what is believed to be the longest section of line to be revived since the Beeching cuts 50 years ago. It will reopen a 30-mile route from Edinburgh to Tweedbank at a cost of £294 million.
It has led to hopes that other lines could be restored, including that between Newport and Stafford.
Councillor Carter admits it could be a long time, if ever, before that dream became a reality, but he warned that any development on the route would see the prospect shattered for good.
In an update to the Marches Strategic Rail Group, of which he is a member, Councillor Carter said he had met Staffordshire councillors who say they understand the problem and will take it on board.
The group at a meeting this week voted to write to Staffordshire councillors in support of the campaign.
Councillor Carter said: "I went to meet the Staffordshire councillors and said I did not have a problem with the new housing estate but did not want it to block the line into Staffordshire.
"That was a positive meeting, they wanted to see whether we could find a way to do it and they are not saying it is too late."
He added: "It is a plan to build a housing estate but the point this line is crossed is by a road they are seeing if it would be possible to get under it or over it with a bridge. The housing itself will not cross the line but the access road will, so it is a question of us trying to find a sum of money that will bridge it and hope we can reach Stafford by train or tram in the future.
"I also took to the meeting a copy of the Newport Town Plan and showed them the 70 per cent of Newport people who would like to see that line return. They are aware we have got the cycle track again so it is a natural progression to want to preserve that link.
"We are working on that now and we need to see if we can find the funding."
The 14-mile railway line between Stafford and Newport closed in 1966 and is now a cycle route, but Councillor Carter, who represents Newport East, has never abandoned the hope that the line could return to the railway.