Proposed changed to the one-way system in Hawes are to be examined by local councillors later this month.
North Yorkshire Council Council has suggested two-way traffic lights could be introduced in the Holme and the Market Place.
This would mean the cobbled road past the White Hart and other businesses, which currently takes traffic heading west, would become a pedestrianised zone.
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The work would be funded by a windfall grant from central government through its safer roads initiative.
However, there are already concerns locally about the proposed scheme.
Upper Dales county councillor John Blackie said: “It is receiving a hostile reception amongst residents and businesses in the town, is seen to be unworkable, and will remove a considerable amount of free parking currently available in the Holme and in the Market Place.
“The prospect of cars queuing at traffic lights in the main Market Place will stem the free-flow of traffic whilst creating an unpleasant environment with waiting traffic emitting petrol and diesel exhaust fumes that will fill the busiest area in the town.”
Cllr Blackie said he had been told that nothing was set in stone with regard to the proposals, and the options include abandoning them altogether.
“The county council will consult fully on its proposals, and is very keen to hear what the local community think of them, before making any decisions,” he said.
However, Cllr Blackie stressed that the final decision will lie with the director of business and environmental services, David Bowe, in consultation with the executive member for highways, Cllr Don Mackenzie.
Hawes resident Jack Sutton, who lives on the area that would be pedestrianised, said there needed to be a proper discussion about the plans.
He said: “Not everyone is against the idea and we need to see what is proposed before the suggestion is dismissed out of hand.”
Hawes & High Abbotside Parish Council will look at the plans at its meeting on July 16, before deciding its response at its meeting in the autumn.
Senior officers and councillors, including David Bowe and Cllr Mackenzie, have been invited to the July meeting.