Morpeth residents claim Maitland council's approach to development applications in the village is sporadic and urge it to be consistent.
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They said the reasons put forward against plans for the former Morpeth Bowling Club site should have also been applied to a rezoning application at 30 Swan Street.
Resident Doug Wright said the two similarly sized lots had many similarities - they were both on the outskirts of the town, had historical significance, and would violate the heritage significance of the 1840 town plan if development occurred.
He said the council report about the bowling club site noted adding it to the Maitland urban settlement strategy and rezoning the land, to make way for a housing estate, would "irreparably undermine the heritage significance of the 1840 Morpeth Town Plan" and "set [a] precedence for other compromises to the town bounds".
The Swan Street report, which called for former Morpeth railway terminal land to be rezoned general residential, failed to mention this historical plan and the sites relationship to it, Mr Wright said. The council has supported the plan and passed it onto the NSW Department of Planning and Infrastructure for a gateway determination.
Council documents show the same staff members were involved in compiling and writing both reports.
"The Swan Street land is on the 1840 town plan. The council also said the bowling club proposal was inconsistent with the Morpeth Management Plan and the [Swan Street] report doesn't even mention it when it should," Mr Wright said.
"The management plan was put in place by council and the residents to govern future development in Morpeth and it stated Morpeth had to remain surrounded by green field sites.
"If [the Swan Street site] gets approved for housing it's going to set a precedence.
''If the bowling club site gets approved for housing that will set a precedence too.
"Who's to say that other grazing land on the outskirts of Morpeth won't end up with housing on it if the council approves one or both of these plans?''
Mr Wright noted the council had correctly compared the bowling club site with the proposed seniors living development in Duke Street, which is yet to be approved almost a decade after the plan was initially put to the council.
He said high-density housing on the bowling club site would be no different to the similar housing proposed for Duke Street, and both scenarios would ''negatively impact on the heritage significance of the town''.
A council spokesman said the council had "adopted a rigorous assessment process" to ensure land considered for development was appropriate, and its efforts over the past 50 years had "effectively maintained the town layout, the street layout and town bounds" so it remained a "distinct entity surrounded by open, rural land".
He also said the local environment plan and development control plan were the main documents used when looking at proposed development in the heritage conservation area.
Peter White, of Swan Street, argued building housing the sites would "destroy the rural feel of the town" and the "historical significance of the sites".
Morpeth businessman Trevor Richards agreed. He accused the council of ''dismissing the heritage significance of the village'' and said visitors came for the history.
''The council doesn't have the right approach in Morpeth, they should be focusing on preserving the town because it's a heritage area,'' Mr Richards said.
Resident Darryl Lobsey questioned why the council was being dismissive about the directions within the Morpeth Management Plan.
''A lot of work went into putting the document together to make sure the town's heritage was preserved and the council and residents were on the same page,'' he said.
