Shifnal Matters said plans outlined in Shropshire Council's Local Plan Review to build on green belt land at Lodge Hill would risk a merge of Telford and Shifnal.
The action group, which formed in 2018 to oppose Shropshire Council's plans for development in the town, also raised highways concerns relating to site access and the close proximity to St Andrew's Primary School.
The council's Local Plan Review shows where housing and employment sites can be built throughout the county up until 2038, and is set to go before cabinet to be approved on December 7.
Shifnal Matters member Zoe Turner, who also represents Idsall ward on the town council, said: "Inclusion of this area in the Shropshire Local Plan Review not only goes against national planning and policy framework, but would be a devastating loss to the residents of Shifnal who have found this space a welcome relief throughout the Covid-19 pandemic.
"There are a number of walks that are well used both through and around Lodge Hill that would be lost if this development was to go ahead, this cannot be allowed to happen."
It comes after Councillor Ed Bird, who represents Shifnal South and Cosford on Shropshire Council, labelled the land between Shifnal and Telford "gold plated" and instructed it should only be built on "under exceptional circumstances".