The council is worried about pressure on infrastructure, the increase and volume of traffic flow, the impact on drainage, a lack of job opportunities and ‘poor public transport and public services’ in the area.
It comes as the consultation time on the proposed Chestnut Homes development has been extended by 24 days, giving residents until November 18 to have their say.
A West Lindsey District Council spokesman said: “There were a number of different deadlines due to additional consultations taking place and requests for additional time to comment from local groups.
“This new date encapsulates them all, rather than having several different deadlines.”
The town council says it is concerned the development will put pressure on doctors, health services, pre-school education and the primary school, which it says is already at full capacity.
Councillors say the flow of traffic has already increased in the area.
And they have also raised fears about flooding at the proposed site.
The proposal has caused concern among residents too, with people joining forces to form Rasen Action Group (RAG) to fight the plans.
The group is worried about traffic and flooding, and says if the plans are approved, it could see a big increase in population for the town - and that existing facilities in the town would be ‘unable to support the extra population’.
RAG has even started a petition, attracting hundreds of signatures, and is urging residents to contact West Lindsey District Council with their concerns.
RAG spokesman Andrew Newton said: “We are not against local development, but this has to be sustainable for the town and progressed in a way which is sympathetic to the existing constraints.”
Chestnut Homes’ application says the proposed development will ‘significantly enhance’ the economic benefits of this land to Market Rasen.
It states: “The site currently offers very little in terms of social benefits to the existing community.
“Chestnut Homes have undertaken a comprehensive consultation exercise with the existing residents.
“This offered the opportunity for the residents of Market Rasen to view and comment on the proposals at an early stage.
“Key areas of concern raised by local residents have been addressed within the application.”