Stonehouse could be left out of the canal regeneration project if a plan for more social housing goes ahead, residents fear.

Next week the district council's planning committee will decide the fate of a piece of land off Bristol Road that used to be the site of a canalside pub, The Ship Inn.

Before the committee will be a proposal to build nine council-owned residential units with private gardens backing onto the canal along with 17 parking spaces.

But Stonehouse residents have been objecting to the plan for affordable housing, arguing that they were promised a community use for the site that would allow their town to take advantage of the canal.

The town's council has described the site as a "missed opportunity" for a footpath, moorings, slipway, seating and a refreshment kiosk.

It also thinks that the district council's plans for canalside improvements at nearby Wharfdale Way and Boakes Drive would not make up for the loss of the Ship Inn site.

"The land is poor quality and not an ideal substitute for the site which would have lent itself to improving the town’s connection with the canal," said town clerk Gill Jennings.

"Stonehouse has been left out of the canal restoration plans in terms of economic development."

A spokesperson for Stroud District Council responded: "Whilst there was always a hope that some sort of community use could be found for the site, this would always have needed to contribute financially to the canal – especially as the cost of the canal to SDC rose following British Waterways’ withdrawal and the general increase in costs.

“A solution was found whereby a filling station would be provided on the site, to include a couple of moorings on the canal.

"This deal unfortunately fell through, but SDC took the site on to provide much-needed social housing - and income for the canal project.

“SDC had a former garage site available at Wharfdale Way, with no obvious future use.

"This site is adjacent to the towpath and thus obviously lends itself to canal-related use.

"This, and the next door fenced-off play area adjacent to the towpath are crying out for improvement – irrespective of anything that happens on the Ship Inn site.”

District councillors will decide whether to go ahead with the council houses at a 2pm planning meeting on Tuesday, November 27.

Their decision comes as the district council is preparing a bid for cash to reconnect Stroud and Stonehouse to the nation's inland waterway network.

It wants money to take the canal under the M5 motorway, reinstate the 'missing mile' of canal near Eastington and forge a new stretch of canal under the Gloucester - Bristol railway line at Stonehouse.