Wallingford should resist any large scale development within its boundaries, especially near the bypass, the town council has said.
But some councillors have warned the town will not prosper if there is a complete ban on development.
However, most of the town council has sided with mayor Nigel Moor's over how Wallingford should shape its future.
He said one option in the county Structure Plan was for Oxfordshire to meet its Government-imposed housing targets by expanding smaller towns such as Wallingford.
The mayor, who is a professional planner, said: "That could affect us in a major way. Wallingford has seen significant housing growth in recent years on brownfield sites and this will meet our needs. "There is no justification for further development within the present boundaries.
"Wallingford should not be considered for large scale development even in the long term."
Adrian Payne said under present boundaries, any development close to the bypass would see the rates income going to other parishes.
At the same time Wallingford would have to deal with the extra influx of people, he warned.
Mr Payne said: "But we must look closely at every proposed development. If we do not develop to a certain degree I do not think this town will prosper."
Parish boundaries will not be considered again by the Boundary Commission until 2015.
That will provide Wallingford's next opportunity to claim all the land within the bypass, which at the moment comes under the jurisdiction of parishes such as Cholsey.
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