Plans to build 70 homes on the 'H2 site' of the local plan, just off Knox Lane, have not yet been submitted to Harrogate Borough Council in a formal application.
But Knox Lane resident, Neil Trickey, is concerned the plans are 'a done deal' for the council as the development will provide around 80 per cent affordable housing.
Mr Trickey said: "I totally agree that we are in need of affordable housing for the population here, which is essential given the industries we have with hotel and restaurant workers who are all fairly poorly paid and as such can't afford anything in Harrogate.
"But to put a block of 86 per cent affordable housing in one place is in essence breaking their own rules.
"They want 40 per cent affordable housing in each development and they want an affordable housing spread to allow social cohesion. They don't want ghettos of certain sorts all over the place."
In October 2016, a site assessment report by HBC found the H2 plot as unsuitable for development, but Mr Trickey said that no opposition to the scheme had been voiced by the council.
He added: "It smells like a done deal to me."
But Mr Trickey also raised concerns with the traffic management and the lack of amenities for a new development in the area.
He said: "The whole thing is totally unsuitable, if you draw a line from Ripon Road, along Skipton Road, Bilton Lane and back up to Oak Beck, in all of that area there are certainly more than 2,000 houses and we have just one shop, one church, one pub, two schools, KD Carpets and an E-cigarette shop.
He added: "All the extra cars have got to get out somewhere and the only way is up Knox Lane, it's bad enough now. Skipton Road is the busiest road outside London and all we are proposing to do is to add more vehicles.
"Harrogate as a town needs more affordable housing but the bottom line is Knox Lane is not a suitable place to put it."
Development consultants, Steve Hesmondhalgh & Associates (SHA) are in talks with the UK's largest social housing provider, Wakefield District Housing (WDH) to deliver the scheme, but no official contract has been signed.
Managing Director of SHA, Steve Hesmondhalgh, said: "We have undertaken two rounds of public consultation and listened carefully to local residents.
"I have heard positive comments about the planned affordable homes and the obvious need for these in Harrogate alongside concerns about the traffic network in this part of Bilton.
"This has prompted a range of additional traffic surveys and I expect to see the results from these soon.
"If we can make a successful case to the Council on this site I firmly believe that the housing here will make a huge difference to the range and type of properties in the town and help to deliver much needed homes through a combination of affordable rent, shared ownership and market sales."
Harrogate Borough Council said it was unable to comment on planning applications which have not yet been submitted.