Council officials fear an upsurge in traffic would gridlock roads if plans for 3,500 homes are approved in Burgess Hill.
The West Burgess Hill Company wants to build the houses to the west of the town.
Its directors say they would invest heavily in the town's infrastructure and public transport if they are given the go-ahead.
However, Richard Walker, director of environment at Mid Sussex District Council, said whatever the developers offered, the area would never be suitable for such large-scale development.
He said: "However much you try to tempt people away from using their cars, the site is so close to the A23 that, whatever is done, it is going to attract a lot of private transport.
"It is completely against government policy, which seeks to locate development in more sustainable areas where there are quick and easy links to public transport.
"We will be arguing against it at the forthcoming West Sussex structure plan examination in public."
The plans have also been met with opposition from residents who fear the town would become overloaded.
Martin Wilkes, director of West Burgess Hill Company, said: "By working from the outset with transport operators who understand travel difficulties we believe we can amend and improve the existing infrastructure to the benefit of Mid Sussex.
"We are working in partnership with the local planning and highway authorities and bus and train operators to conduct joint feasibility studies on transport in Burgess Hill and to surrounding localities."
The first public examination of the structure plan takes place from August 13 to September 19.
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