A rowdy meeting of 300 angry residents erupted into chaos as many called for the resignation of the mayor and his deputy.
Tempers ran high and one woman fled from the packed room in tears as Telscombe Town councillors met to discuss Southern Water's proposal to buy land on Telscombe Tye.
But many backed Telscombe Cliffs resident Jack Dunkerton in his chant of "Resign, resign, resign."
Southern Water wants the land as part of its plan to build a giant sewage treatment works there.
If the company is given planning permission for the Portobello development, it has offered £115,000.
But Don Burrell, chairman of the Campaign for Residents Against Portobello, claimed the offer was undemocratic. He said: "Why should Southern Water offer this massive sum of money when, if planning permission is granted by the Government, it can acquire the land for a fraction of the cost via a compulsory purchase order?
"We can only draw the conclusion that Southern Water hopes to sway the minister's decision by implying the town council and the local people are in favour of selling off the land and giving the monstrous Portobello development their blessing."
Hundreds of residents crammed into Telscombe's new town hall in a show of outrage at the council's discussions with Southern Water. As people overflowed out of the building and on to the street, there were calls for the meeting to be cancelled for the sake of safety.
Independent councillor and deputy mayor Tony Prince was shouted down by furious residents when he tried to explain his position on Southern Water's offer.
Amid accusations that the money was needed to pay for the town's plush new civic centre and calls for a motion of no confidence, Coun Prince said: "I'm angry. I'm very angry."
Coun Prince told The Argus last week that he was in favour of negotiating with Southern Water.
He said if the company secured planning permission, a compulsory purchase order would automatically go with it and the council could only receive £2,000 for the clifftop land, which it owns.
But he told the meeting: "In spite of what you read in the Press of what these stirring politicians on the council have said, I'm in no way in favour of selling any part of the Tye."
Any plans to sell land to Southern Water fly in the face of a town referendum last year which showed a 95 per cent vote against the sewage works.
The result of one of Sussex's most bitterly fought public inquiries will be revealed in the autumn.
But the land sale issue was halted at last night's meeting after the council unanimously voted to back a proposal by Coun Paul Cosham.
Climbing on to a table to deliver his proposal, Coun Cosham said: "I propose that no further contact or negotiation is to take place until the results of the public inquiry are known, and any contact made with Southern Water by the town clerk or any councillor will make them liable to censure and a vote of no confidence may be taken against them."
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