The asphalt path crosses a wooden bridge over the River Windrush, and leads over the water meadow to a spot just short of West End, bypassing busy Bridge Street.
But Oxfordshire County Council has since discovered the short section of track which connects the path to West End is privately owned - and has had to put up signs telling people they have no right of way.
Nothing is physically preventing people from continuing to use the route. Asked if the public were allowed to use it or not, Witney North county councillor David Robertson said: "I think what we're indicating is that it's private property and no individual has the right to cross it without the permission of the owners."
Housing developers had to build the path to get permission from West Oxfordshire District Council to turn former textile industry buildings at Woodford Mill, in Mill Street, into homes.
Mr Robertson said: "Part of the planning requirement was for the developers to provide a path down to the water meadow, which they took upon themselves to do. It wasn't meant to be a path across from Mill Street.
"Building a path has created an expectation, and I can well understand people wanting to use it, but we have to resolve the rights of way issues."
John Bingley, of Quarry Road, first found out about the dispute when handmade signs went up. He said: "The idea is brilliant, but I can't believe it has been put in without a full public right of way being established."
The path runs next to a row of cottages off West End, where one of the landowners lives. People using the path are alleged to have caused damage and abused residents.
A resident, and the other landowner, Les Basson, from Hailey, declined to comment.
Mr Robertson said the council planned to move the path to the opposite side of the stream to reach West End, or could use a compulsory purchase order to acquire Mr Basson's land.
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