Blake PLC, Factfocus Ltd and Johnnie Johnson Housing want to build 59 houses on the former Territorial Army barracks site.

They have submitted two applications but both were rejected by Macclesfield Borough Council on the grounds they would lead to an oversupply of housing in the borough.

The authority has placed a moratorium on new house building. It allows for only 4,500 new houses to be built between 1996 and 2011.

This is to support urban regeneration in and around Greater Manchester, but 4,921 houses have already been built since 1996.

A public inquiry was held last Thursday in Macclesfield Town Hall before inspector Michael Hetherington.

John Barrett, on behalf of the appellant, argued that the housing moratorium did not apply as the application had been submitted before the September 2003 cut-off date.

He said the scheme was highly suitable as it was on a previously developed site, was sustainable, and included an affordable housing element - 15 of the 59 houses.

But Ian Ponter, representing the council, said the development would lead to an oversupply of housing and that the appellant's claim that some of the units were "affordable by design" was nonsense in a such a prosperous area of the country.

Ivy Ward's Coun Andrew Knowles said: "As a borough councillor, with Macclesfield Express' backing and the people of Macclesfield, we fought to keep our TA barracks.

"A military presence of one form and another had been in Macclesfield since 1854 but our main reason for wanting to keep our TA base was because it was a community benefit to the people of Macclesfield.

"My aim, and the people of Macclesfield's, is to see a project to replace the TA that is community based. Another small housing estate? We have plenty of those in Macclesfield and in the pipeline. It is the likes of a care home we are short of."

In 1998 cutbacks at the Ministry of Defence brought about a review of TA bases in the UK, with a view to selling some off to raise money. Macclesfield's base was identified as a suitable asset.

Coun Elizabeth Gilliland, also Ivy Ward, argued the scheme would lead to an unacceptable loss of unofficial open space. "It was clear from the illustrative housing layout that some of the houses would be built on land outside the existing perimeter fence that is, at present, open space together with the access road also on open space land," she said.

"This open space land is the only wild area left in the middle of Macclesfield and the residents do not wish to have it upgraded.

"We feel it should be left as it is for the residents of the area to enjoy as they have done for years. This area is a wildlife haven where there are a wide variety of insects, bees and the myriad of butterflies all sustained by the wild flowers and grasses that grow there, not to mention the many beautiful mature trees which provide shelter for the many varieties of birds that abound.

"If this area of open space is upgraded there is no end to the damage that will be caused to the very valuable flora and fauna of the area."

Chester Road resident Christopher Evans also spoke at the inquiry about the loss of open space and also highlighted the traffic problems on Chester Road.