More than 200 people have signed a petition opposing the sale to a developer of land next to the Bristol-to-Bath cycle path.

Residents and campaigners are up in arms at the prospect of Bristol City Council selling a strip of land to Squarepeg, the developers of the former Elizabeth Shaw chocolate factory at Greenbank.

The company is due to submit a planning application to build 267 homes, as well as offices and shops, this month but is also negotiating an agreement with the council to include a nearby stretch of land in the scheme.

The land would be used to build a number of "cycle houses" – properties built with cyclists in mind – and a cafe for people using the cycle path.

The provisional arrangement to sell the land is subject to Squarepeg being granted planning permission for the whole site, but critics claim that makes it a foregone conclusion.

Easton councillor Faruk Choudhury is collecting signatures for the petition, which he plans to present to the council at the next full meeting.

He said: "It sounds like a good idea in theory, but local people are concerned this long row of homes will mean the hedge is cut down and this will damage the green corridor look of the cycle path.

"People are also worried the garden gates of these family homes open directly on the cycle path and could be dangerous for children.

"If this long row of houses is built directly along the cycle path, will that open the floodgates to similar house-building all along the cycle path?

"That would change the whole nature of the path, which people have come to think of as a linear park.

"On behalf of local residents, I'll be urging the council not to pursue the land sale until we can fully examine the impact this row of houses will have."

A website has been set up by residents concerned about the development – www.keepthegreenbank.blogspot.com.

Among the opponents to the proposed land sale are green campaigner and environmental lecturer Glen Vowles, 46, of Knowle. He said: "This land is relatively high quality in terms of biodiversity and it's a big absorber of carbon.

"Losing land piece by piece is a very bad deal. Selling off green spaces and concreting over them is going to do nothing. It's compounding the problem and is effectively like putting more CO2 in the air."

Cyclist Chris Hutt, 57, of Clifton, has also written to the council to oppose the land sale and is concerned about other aspects of the development. He said: "There will be a seven-storey, twin-tower block which will be well over twice the height of the houses, and is going to dominate that section of the path."

Peter Webb, the council's portfolio management officer, has written to Mr Hutt in response to his objections.

He says in his letter: "The potential loss of the green corridor has already been raised by the council's nature conservation officer.

"If this sale proceeds, a condition will be that Squarepeg engage in dialogue to ensure that proposals provide the necessary compensating measures for any loss of habitat and vegetation. In response to the claim that this is a 'done deal', I can confirm that while discussions have taken place with Squarepeg over the potential sale, no terms have been agreed."

Squarepeg said: "As well as housing the cycle houses, this would be the area proposed as the entrance to the public square from the cycle path, which is also the proposed home to the cycle hostel and cycling hub area.

"Incorporating this piece of land within the development has enabled the architects to produce this cycle focused element to the development.

"While sufficiently realistic to understand that not everyone will see the benefits to the proposed development plans, Squarepeg's aim from the outset has been to produce a viable development that has good green credentials and provides benefits to the community – it still is."