Members said the application did not reflect the contents of the community plan which had been written by and for the community.
The outline proposal which has been submitted to West Devon Borough Council on behalf of site owners Vicks Auctioneers includes a new market square for the town, housing, a small supermarket and retail space, employment space, a medical centre and community buildings.
Hatherleigh Town Council said it had spent two years working on the community plan document having been chosen to complete the 'Plan It' process by the borough council.
In a statement to the Times, the council said: 'If this document is ignored then the whole process would have been a complete waste of time.'
There was concern that there was no provision for the popular fur and feather market and insufficient parking spaces for the market in general.
'The council believes that without additional facilities to house the fur and feather and accompanying auctions, the market will not attract the present numbers and therefore have a detrimental effect on businesses within the town and small rural businesses in the wider parish,' it said.
The plans by Clifton Emery Design propose a square very close to the town centre which is designed for mixed use and to accommodate other town events like the carnival when the market is not on. It would be fronted by houses on two edges and by a supermarket and retail units with accommodation above on the northern side of the site.
Parking for houses, at 1.6 spaces per household is not in line with the community plan, which suggests two per house. 'Plan It' also suggests a level of development equating to 105 houses over 13 years with any new development being limited to 80% of that total — the proposed development is for 116 units.
The council said that shared parking between house owners and market visitors would never work. It also stated that the current application did not allow linkage between the present town centre and the new development.
'In the view of the town council the whole application is biased towards creating a buffer for the abattoir rather than the town centre needs,' it said.
Members have asked that a site visit be made by the borough council's planning committee and strongly recommended that this take place on a Tuesday being market day.
The density of housing has also been opposed by the 'Save Hatherleigh' group which was formed following the first consultation meeting on plans to redevelop the market going back to 2011.
Neil Emery of Clifton Emery Design said the company had worked more closely with local groups and councils on this plan than any other and had delayed the application to see the result of the Hatherleigh Plan-It.
'The market is a key part of the life of Hatherleigh and we hope these plans can help preserve its future,' he said.