Persimmon Homes own the 13.2 hectare strategic gap north of Goring railway station, which separates Goring from Ferring.
A topographical survey was carried out last week which has led to fears a planning application is imminent.
Ed Miller, secretary of the Ferring Conservation Group, said: “It’s outrageous, this land is greenfield. It’s firmly in the policies of both Arun and Worthing councils to be maintained as a strategic gap.”
Mr Miller added if an application was submitted the group would campaign against any development.
Kathryn Walker, chairman of the Ilex Conservation Group, ‘totally agreed’ with Mr Miller.
She said: “If it’s built on it means you will have a continuous stream of urbanisation.”
Paul Bedford, senior land and planning manager for Persimmon Homes South East, said Persimmon had ‘always made it clear to Worthing Borough Council that the site is available, and would be suitable for development’.
Carole Robertson, chairman of Ferring Parish Council, warned if Persimmon decided to submit a planning application it could have a ‘very serious’ impact on Ferring’s neighbourhood plan.
The council wants to acquire 0.2 hectares of land for use as an allotment site so that the current Ferring allotments can be used for housing as part of the plan’s criteria for 50 new homes in Ferring.
The strategic gap was one potential option for the relocation of the allotments but talks have yet to be held with the Persimmon Homes.
Mrs Robertson added that more large family homes were not needed in the area.