Oxford West and Abingdon MP Dr Evan Harris warned today that a precedent could be set for affordable housing levels if a new block of flats in Jericho gets the go-ahead.
Last year, the city council rejected developer Spring Residential's plans to build 54 one and two-bedrooms flats and a boat repair berth on the former Castle Mill boatyard site.
More than 200 people - including Oxford author Philip Pullman - were at Oxford Town Hall on Tuesday for the start of the planning inquiry, after Spring appealed against the decision.
The lack of affordable housing offered by developers is one of nine reasons for the council refusing the development.
Evidence at the inquiry yesterday focused on whether Spring should be allowed to offer only 35 per cent affordable housing, not the 50 per cent minimum set by the city council's Local Plan in November 2005.
Dr Harris plans to speak at the inquiry on Friday and added: "Affordable housing is a critical issue in this case for the needs of the people of Oxford.
"It is not reasonable for the developers to claim they were not aware of the Local Plan, and if they get the go-ahead on this basis it could set a terrible precedent."
Douglas Edwards, representing the city council, said in his opening statement that the previous plan by Bellway Homes, refused on appeal in August 2005, provided "no precedent" for the affordable housing provision now required.
The council then accepted an offer of 35 per cent affordable housing in the Bellway application but that pre-dated the Local Plan.
The inquiry is expected to finish early next week.