The boss of a car firm believes a district council is trying to squeeze his company off its site — throwing a question mark over more than 500 jobs.

As part of plans to overhaul the use of the former USAF airbase at Upper Heyford, Cherwell District Council wants Paragon Fleet Solutions, which revamps old hire cars, to concentrate its operation on just a third of its present acreage.

Managing director Steve Maltby has branded the idea "utter madness".

The North Oxfordshire Consortium (NOC) housing group, which purchased the 1,250-acre site for £24.4m in 1993, lodged plans with the council to redevelop the site for housing and business.

The consortium's plans include allowing Paragon 40 acres — a move Mr Maltby has backed, even though the firm currently operates on 62 acres.

But planning officers at the council believe 17 acres is enough space for the firm, which employs 510 people, because the site is a designated conservation area.

Mr Maltby said: "To contemplate reducing our land from 62 acres to 17 acres means we will be forced to leave. And we don't want to.

"For our firm, anything under 40 acres is not viable. It is the minimum space we could cope with.

"It is utter madness given the current economic climate. We should be working to sustain employment in the area and not taking it away.

"Quite a large percentage of the workforce live on the site and there is nowhere suitable nearby to relocate to."

A spokesman for the council said: "The council has won an appeal against Walon — another car storage company — for the same reason. They have now left the site. "The council's revised plans for the site carefully considered the issue of the future of car storage and allows for 17 acres."

The NOC, which hopes this month's public inquiry will help push through the plans, has spent 11 years trying to regenerate the site.