Much Wenlock Town Council says it is concerned about the potential impact on the town of the increase in traffic which could be created by building 1,000 new homes on the former power station.
The application to redevelop the power station site goes before Shropshire Council's planning committee next week – where it will be decided whether the scheme will be allowed to go ahead.
The plan is recommended for approval by council planning officers but members of Much Wenlock Town Council have urged the committee of councillors voting on the decision to press for a firm plan to improve their town's roads.
The A4169 from the development site at Buildwas to Much Wenlock is likely to see a significant increase in traffic as a result of the new homes.
Much Wenlock Mayor and Shropshire councillor Dan Thomas said there were real concerns over the impact that extra 'rat run' traffic could have on the town.
Councillor Thomas's objection to the proposal has been backed by the town's former county councillor David Turner, and Much Wenlock Civic Society.
The developer, Harworth, had initially proposed traffic lights be introduced at the Gaskell Arms junction – a plan rejected by Shropshire Council.
Now the company has agreed to pay £250,000 towards a future plan for the junction, which has yet to be agreed.
Councillor Thomas said: "This is completely unacceptable to the people of Much Wenlock and we want to make our voices heard before Shropshire councillors vote on the scheme.
"We call on the Shropshire planning committee to do their duty and protect the people and the town of Much Wenlock from the damage and destruction that this development will bring; unless the developer provides an acceptable solution."
A statement from the town council said: "Much Wenlock Town Council is horrified at the prospect of hundreds of additional vehicles per day driving through the town from the proposed development at Buildwas Power Station.
"These vehicles will massively worsen the problem of rat-running through the ancient medieval town and cause even worse congestion at that well-known pinch-point, the Gaskell Corner.
"Despite this, the developer has provided no acceptable highway improvements that might help to reduce this devastating impact. Much Wenlock, the famous ‘Jewel in Shropshire’s Crown’ is being sacrificed merely in order to facilitate redevelopment of the Power Station site."
The planning report from Shropshire Council says it expects 20 per cent of the traffic from the development to use the A4169 towards Much Wenlock.
It also suggests there will be time to complete the plan for the junction before the development is finished, adding: "Harworth’s highway consultant initially recommended signalisation for the Gaskell Arms junction at Much Wenlock but this was not supported by the Shropshire Highway Authority.
"The company has agreed instead that equivalent funding should be ring fenced for use in a comprehensive improvement scheme for the junction incorporating additional funding anticipated from other sources.
"The details of this scheme will be confirmed following stakeholder engagement exercise. It will be some time before traffic from the proposed development begins to have any material impact at the junction, during which time details of the scheme can be finalised."
A decision on the plan will be taken on Tuesday.