The centre, on former MoD land, would hold 750 people

The group is trying to stop a planned complex for 750 asylum seekers being built on former Ministry of Defence land near Bicester in Oxfordshire.

An appeal against the plan was thrown out by the High Court in March.

Now three appeal judges in London have reserved judgment after hearing a day of submissions from lawyers on Thursday.

'White elephant'

The site, between the villages of Arncott and Piddington, will house up to 400 men, 50 women and 300 family members while their asylum applications are being processed.

They will be free to leave the centre during the day, but will be expected to sleep there at night.

At the High Court, the council's lawyers had argued that John Prescott, the deputy prime minister, had ignored the results of a public inquiry when he granted planning permission.

On Thursday, Banbury MP, Tony Baldry, said the battle was having a serious impact on the government.

"I have a feeling that in Whitehall they may well be doing quite a lot of reassessment of all this - they are very battered and bruised.

"They have realised that they are going to have very substantial difficulties in rolling out a number of these accommodation centres.

"They are very expensive, I think the Treasury is going to be very reluctant to spend large sums of money on a scheme that becomes a bit of a white elephant."