FEARS of a 'new town' being built in Headington have been sparked by a masterplan proposing thousands of new homes on two NHS sites.

Residents say they are horrified by the extent of the development being contemplated at Warneford Meadow and Park Hospital.

Oxfordshire Mental Healthcare NHS Trust has set out proposals to build on 75 per cent of the sensitive open grassland site. And it says the development on the two sites could include 460 new homes, 300 retirement homes and accommodation for 3,400 students.

The importance of the site emerged when Junior Health Minister Liam Byrne revealed that Warneford Hospital land was considered the NHS's sixth most valuable "immoveable fixed asset," worth £30.9m But residents' groups say the masterplan confirms their worst fears about the trust's plan to sell off the sites in order to upgrade facilities at the nearby mental health hospital.

And they warned that the suggested development is more intensive than what is proposed in the Oxford Local Plan.

OMHT chief executive Julie Waldron last week told the city council's north east area committee why the sale of the land was essential to the trust's modernisation plans, with the trust insisting that no firm decisions have been made about the development of the sites.

But a masterplan unveiled at a one-day public exhibition gives a clear indication of the likely scale of the scheme, with proposals to make the land home to more than 4,000 people.

It is proposed that a 32,500 sq m medical centre and an academic building of similar size, both holding 3,000 occupants, should be built on the meadow site. A smaller medical centre and academic building is proposed on land behind Park Hospital, where there would be 600 homes, including 400 student units.

An outline planning application will be submitted to the city council in the early summer, with work expected to begin next year.

Tony Joyce, chairman of the co-ordinating committee of Headington Residents' Associations, said: "People who went to the exhibition were shocked to see the details of what is being proposed."

Auriol Hamer, chairman of Highfield Residents' Association, said: "With this number of people it feels like a small town."

The masterplan is drawn up by the real estate company Atisreal. The accompanying document says development on the meadow would be focused in the centre of the site, maintaining wildlife corridors around the edge.

It notes that Oxford City Local Plan sets out a number of different uses for both sites including accommodation for Oxford Brookes University students and adds: "As a public body, the NHS has to demonstrate that they have achieved the best value for the sites. By applying for all uses, we will ensure that the highest land value is achieved for the site.

"The accommodation will be key worker housing for health care workers. If there are not enough hospital staff to fill the units then they will be offered to other key workers in the area. It is also proposed to provide a small proportion of private housing on the site."

A spokesman for the trust said: "We are meeting with local residents to involve them early in our plans. There are no decisions taken yet on what the land will be used for once sold, and the council's Local Area Plan has guidelines about what appropriate use of the land can be."