Traveller families have lived at Smithy Fen for 40 years

But travellers living at Cottenham, Cambridgeshire, said they were suffering racial discrimination.

The inspector is hearing more than a dozen appeals from travellers whose plans for 17 new plots at the Smithy Fen camp were turned down.

Their applications have been refused by South Cambridgeshire District Council.

A travellers' site housing around between 30 and 40 families has existed at Smithy Fen for 40 years.

Influx of travellers

But over the past year scores more have arrived, setting up camp illegally and many are challenging local council planning orders telling them to leave.

More than 1,000 villagers in Cottenham threatened to withhold their council tax for 2004-05 if the size of the site was not curtailed.

Residents say there have been growing problems of anti-social behaviour with the influx of extra travellers.

Rick Bristow, for the Cottenham Residents' Association, told the inquiry in Cambridge the village had no history of anti-traveller behaviour but there were now rifts and tales of open hostility resulting from purported thefts of machinery and animals.

"The situation now is that we seek dismissal of all appeals ... parts of Cottenham Village have been victim to crass anti-social behaviour and appalling incidents of intimidation.

"This is not an expression of hate or racial intolerance. It is a reflection of our belief that peaceful co-existence means maintaining a balanced community."

Alan Masters, for the gipsy families appealing against the refusal of planning permission, said it was "about racial discrimination against an ethnic minority".

Mr Masters said the land was not in the green belt and not an area of outstanding natural beauty or special scientific interest.

Harm the area

He said Smithy Fen was more than a mile from Cottenham and visitors would not see gipsies in the village.

If permission was granted there would be 250 travellers living near Cottenham, which had a population of 5,000.

Melissa Murphy, for South Cambridgeshire District Council, said the council felt that granting permission would harm the area and Cottenham.

The inquiry in Cambridge, which is expected to take eight days, will make recommendations to Deputy Prime Minister John Prescott who should give a decision on the appeals in about three months' time.