Murrell Way, at the Sutton Grange housing development in Shrewsbury, is named after the anti-nuclear campaigner, who was abducted and found murdered in 1984.
It is one of a number of streets on the estate, being built by Taylor Wimpey, to be named in tribute to Miss Murrell. The land was once her plant nursery, and other names on the estate will have a gardening theme.
However, the sign put in place for Murrell Way spells her name with only one "l".
Chris Eldon Lee, member of the Hilda Murrell Forum – a group set up in tribute to the rose grower – said they had been in favour of the decision to name the streets after her, but the "sloppy" mistake needs to be corrected.
He said: "I was for many years the chairman of the Hilda Murrell Forum and we were very pleased with that decision. They have now put the sign up and it is wrong. It says 'Murrel Way' with one 'l'. If it was not so stupid it would be an insult. She was one of one Shropshire's most famous people. This gesture by the council was welcomed and has been completely turned upside down by the spelling on this sign."
The developers have been approached for comment.
The forum was set up initially to further Hilda Murrell's interests in the environment and natural history. Every five years it hosts a conference in her memory.
Miss Murrell was abducted from her house in Shrewsbury on March 21, 1984. Her body was found three days later in a copse in the shadow of Haughmond Hill.
Her murder remained unsolved for 21 years until builders' labourer Andrew George was convicted of her killing.
George has always maintained that he was not responsible.
The street name for the development was agreed with Miss Murrell's nephew, Robert Green, and supported by Shrewsbury Town Council.