Villagers fear they will be unable to sell their homes if plans for an asylum centre near Bicester go ahead.

Homeowners in Arncott say the housing market is already being affected.

Banbury MP Tony Baldry has asked Lord Rooker, the Home Office minister for asylum and immigration, to look into compensation payments for villagers.

Jackie Davies, 49, of Buchanan Road, Arncott, said she had sold her house, but the buyer backed out after learning about the proposed centre.

She said: "We're not even getting people viewing any more. Lots of people have seen the house but it is very difficult to find out why they don't want to proceed.

Estate agent Michael Crouch, who is acting for Mr and Mrs Davies, said: "The buyer heard about the possibility there was going to a centre and that's the reason why they decided against it."

He believed the centre would have a short-term effect on house sales in the area, but in the end people would "just accept it".

Mr Baldry was convinced plans for an asylum centre on MoD land between Arncott and Piddington had deterred buyers.

He said: "I've already had constituents coming to see me telling me that they were in the process of selling their homes, a decision they had taken a long time ago, and they had got buyers lined up. As soon as the announcement was made about the asylum centre at least two families I know of, one in Piddington and one in Arncott, were affected.

"I've heard of other families in similar difficulties.

"The Government is going to have to think about compensation."

In a letter to Lord Rooker, Mr Baldry asked the Home Office to consider compensation to householders if independent chartered surveyors could demonstrate the impact the centre could have on property values in Piddington and Arncott.

Similar compensation payments were made to homeowners who were affected by noise from the M40, when it was built in the mid 1980s, and the former US base at Upper Heyford.

In his letter he said: "Your announcement has had an immediate impact on house prices, and people's ability to sell their homes in the vicinity of sites you have selected for accommodation centres for asylum seekers."

Tony Lewis, chairman of Arncott Parish Council, claimed more properties were for sale in the village "than ever", but declined to speculate on the reasons.