A property developer plans to change the face of Lewes with a huge £150 million development built on a flood plain.

Proposals have been put forward to transform the Phoenix Industrial Estate, in the centre of the town, into a complex containing 800 homes, a three-screen cinema, shops, restaurants, offices, a footbridge, an art gallery and a 400-space car park.

But the plans have been branded "madness" by a top Green politician.

It is estimated around 1,000 jobs would be created but a campaign group called Phoenix Action has been launched to stop the development amid fears that the town centre's vibrancy could be undermined.

Concerns have been raised about the danger of flooding from the River Ouse after the site was submerged by around 10ft of water during the floods of 2000. But developers Angel Property propose to build the homes above the car park so the houses are not at risk.

Green Euro-MP for the South East, Caroline Lucas, said: "To consider building 800 houses on the banks of a river known for flooding beggars belief. In the 2000 flood this area was 10ft under. To proceed with these plans would be madness."

Tub Collins, director of Phoenix-based Furniture Now!, said: "I'm worried that if this housing development goes ahead Furniture Now! will have to move away from Lewes as there's nowhere else suitable in town I can think of."

The developers, who plan to submit their planning application to Lewes District Council in July, said they intended to build a new industrial estate on the other side of the river.

John Stockdale, 65, chairman of Phoenix Action, said: "At first it sounds very attractive because it is 800 homes that we need in the South-East as well as office space. But the downside is that they are planning to build up to eight storeys in a town where no building is over three storeys. It will clearly change the nature of the town.

"The other aspect is the flats will be quite small and there will be lots of single people and older people moving in, but Lewes is short on accommodation for young people with families.

"Also it's on a flood plain. They will have to build a flood wall, which will cut the town in half."

Bill Collison, owner of Bill's Produce Store on Cliffe High Street, Lewes, said: "I think as long as citizens are listened to then we have to move forward.

"Any competition is good for customers and traders will have to try harder. I think it would encourage more people to come to Lewes.

Charles Style, chairman of Angel Property, said: "We have done an extensive public consultation and made some adjustments based on people's comments. We have also consulted with English Heritage.

"One concern was that the eight storey buildings would be like tower blocks, which we don't agree with, but we will now have only one eight-storey building with the rest five, six and seven storeys.

"The other thing people were concerned about is the high density of people, but it is on 6.8 hectares of land, which is a massive site. There will be a cinema, similar to the Duke of York in Brighton, health facilities including a doctor, dentist and creche, 400 yards of river frontage and landscaping, and a 400-space car park."

A spokeswoman for Lewes District Council said: "The planning department would consider any application extremely carefully as well as consulting with other relevant organisations, for example, the Environment Agency."