Shifnal Matters, which is opposed to Shropshire Council's plans to build homes, business sites, and a new road in the town, has called for a major re-think over the authority's proposals.
The plans, which are contained in the council's local plan review, include significant development to the south west of Shifnal.
Shifnal Matters, which wants the plans scrapped, says that recent flooding in one of the areas earmarked for future housing illustrates the potential problems with the scheme.
A spokesman for the group said: "Lodge Hill in Shifnal is one of the areas most affected by flooding particularly in the last weekend of October due to heavy rainfall, and is again partially under water this week, following heavy rain over the last few days.
"The fields around the entrance to Lodge Hill form a natural attenuation area for flood water, however in the October event water flowed off this area and into the gardens of properties just to the north.
"However, that’s not stopping Shropshire Council attempting to safeguard the land around Lodge Hill for up to 1,823 houses as part of the local plan, despite being aware of the risk.
"Shifnal Matters asks is land under 50-60cm of water every time there is heavy rain an ideal location for a housing estate?"
Both the Conservative and Labour candidates for the Wrekin parliamentary seat, which covers Shifnal, have criticised the plans for the town.
Conservative Mark Pritchard has been vocal in his criticism of the scale of the housing plans, and has also held a meeting with the Environment Minister, Rebbeca Pow, to discuss flooding in Shifnal, Albrighton and Wolverhampton.
Dylan Harrison, Secretary of the Wrekin Labour Party and Labour candidate for the Wrekin commented on a picture of the flooded land, saying: "Clearly building anything except a duck house here would be crazy."
Shifnal Matters has also raised concern over the knock-on impact of house building on the land.
A spokesman said: "Alongside this and further across the proposed development site at Lodge Hill is the Wesley Brook, where there has also been extensive flooding between Shifnal and Kemberton as a result of the heavy rainfall in October.
"Clearly placing nearly 2,000 homes on land in a natural floodplain is likely to increase flooding downstream."
Shropshire Council has been contacted for comment.