The group, Save Our Severn, said residents have not been clearly informed of the River Severn Partnership’s proposals and are concerned the dam could cause “catastrophic” flooding of homes and businesses north of the barrage.
The Environment Agency and Shropshire Council, part of the River Severn Partnership, will soon consult with communities about the proposals. The council was recently criticised after some people whose properties could be affected by the dam found out about it through the media.
Their plan seeks to reduce the risk of flooding from the River Severn for threatened areas by storing flood water higher up the river.
Adam Lines from the Environment Agency said: “This is a very visionary project and one we’re excited to be part of.
"The Severn Valley water management plan could help communities along the whole of the River Severn as it passes from Wales through Shropshire, Worcestershire and Gloucestershire be better prepared for the extremes of climate change.”
The planned northern relief road in Shrewsbury forms an important part of the proposals; it includes designing a road embankment that could help contain and store flood water away and upstream of Shrewsbury.
But Save Our Severn said that it would simply move the problem further up the river, threatening farms as well as the villages of Melverley and Pentre to the west of Shrewsbury.
The group said that parts of the county could become uninhabitable no-go zones. It also raised concerns that a dam would increase greenhouse gas emissions by creating areas of stagnant water where plant life rots.
A statement said: "The dam is a short-term solution at best and with climate change set to worsen and river levels predicted to rise even further, the problem needs tackling at the source.
"[We want] to see work carried out to explore how water can be held back or stored at the source, in the Welsh hills, alongside increased uptake of natural flood solutions through support schemes."
One of the founders of Save Our Severn and a third generation tenant farmer, Sam Barker, whose farm could be flooded if proposals go ahead, said: “No one wants to see a repeat of the flooding Shropshire experienced this spring.
"Rivers are set to rise and doing nothing is not an option. However, we think these plans are simply swapping one problem for many others.
“All year-round mud flats are a very different environment compared to the lush, green haven farmers along the river currently manage. The creation of the dam and subsequent, long-term flooding would destroy thousands of acres of hedgerows and stewardship ground that are home to birds, hares, and even endangered species like curlew.
“We need a sustainable, long-term solution that will benefit everyone and protect homes and businesses for generations to come.”
For more information visit saveoursevern.com or email firstname.lastname@example.org
The river partnership said it will begin consulting "as soon as possible".
Along with input from communities and partners, environmental and ground surveys will also be carried out to increase understanding of all of the areas that could be potentially impacted by the proposals.
Mark Barrow from Shropshire Council said: “It is essential that we communicate and engage with people as soon as possible.
“This is a once in a generation opportunity to review what infrastructure needs to be in place to mitigate the impacts of climate change, flooding and water security.
"This is a long-term proposal, so it’s critical that everyone who has a property or business that is currently at risk of flooding or is affected by flooding from the River Severn, is able to inform and shape this work.”