A rare fungus once thought to be extinct in the UK could block a new 1,800-home 'village' being built off the A2, campaigners hope.

Candelabra coral, which is commonly found in North America, has been discovered in South Blean Woods close to the Winterbourne Fields development site between Faversham and Canterbury.

Developer Shaptor Capital wants to transform almost 220 acres of “poor-quality” farmland south of Dunkirk into a scheme boasting shops, restaurants and a primary school.

But those opposing the project say the presence of the fungus, known as crown-tipped coral fungus due to the crown-like tips of its branches, is further proof the site is unsuitable for housing.

Vicky Ellis, general manager of Kent’s Council for the Preservation of Rural England branch (CPRE), says she is "extremely excited" to hear about the discovery, which is one of just 14 cases reported nationally since 1883.

"It is a significant find, and illustrates just how valuable the woodland is and how little we know about what secrets it may hold," she said.

“To even think about placing a development such as Winterbourne Fields in such a sensitive and unsustainable location such as this, defies all logic.

“The site is riddled with fresh waterways, including a major tributary which feeds into the River Wantsum.

“This whole area is incredibly special and should be protected and if used for anything, it should be used to connect the protected woodland that flanks it on three sides.”

The exact location of the fungus has been kept under wraps to prevent potential crimes but it was thought to have become extinct in the UK, with no records in the entire 20th century until 2012 when it was found growing in Suffolk.

Shaptor Capital, which submitted the plans to Swale Borough Council (SBC) earlier this year, claims its project “supports the greenest of living environments imaginable, being shrouded by magnificent ancient woodland".

If approved, the first 270 homes are hoped to be delivered by 2027, then 675 by 2032 and the rest by 2039.

But Carol Goatham, of campaign group Farms, Fields and Fresh Air, said the developers “don't actually know what's on the site”, which is not in SBC’s Local Plan.

“I think it's really important that this fungus in itself is an indicator that there's so much more on the site and around the site that we don't know that will be impacted if 1,800 houses get built there,” she said.

Positioned mainly to the south of the A2, Shaptor Capital says its development would boast 1,815 dwellings – between one and four beds – including a 160-bed retirement home and 545 affordable properties.

New slip roads allowing drivers to enter and exit the estate via both London and coastbound carriageways have been proposed, while the existing Dunkirk slip road would be closed but retained in case of future development.

North of the A2, allotments and an employment park will be introduced alongside roundabouts offering access to the village and Dunkirk while to the west, sports pitches, a pavilion and a gym would be built whilst cycling routes would be laid down throughout the estate.

A 60-acre plot has been earmarked for green and amenity open space, including a 5km recreation trail.

But even before the presence of the fungus was revealed, hundreds of objections noted concerns over the impact the homes would have on wildlife and infrastructure.

Cllr Rich Lehmann (Green), who sits on both SBC and Kent County Council (KCC), says he believes the plan is “flawed for a number of reasons, many of which relate to its location”.

“It has known issues with water supply, surface water flooding and sewage disposal,” he said.

“To even entertain the idea that this might get planning permission shows how truly broken our current planning laws are.”

KCC’s ecological team has told Shaptor Capital its plans would “result in a negative impact” on the nearby wildlife, which includes 10 species of bat and 37 types of bird.

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“From looking at the proposed development layout it appears that there is limited open space within the site," it said.

“Therefore it is likely that future residents will utilise the surrounding woodland for recreation.”

In a statement, Marco Nardini, Shaptor Capital’s managing director, says the company aims to develop an “environmentally responsible neighbourhood built on land that is currently classified as low-grade agricultural (grade four)”.

He said: “This land has been unsuitable for food production for the past seven years and has limited potential for agricultural use beyond energy crops without a considerable increase in additional nutrients – producing issues with nutrient run-off.

“Therefore, it presents an ideal opportunity for much-needed housing development.

“At the heart of Winterbourne Fields is a commitment to sustainability, it will be embedded in every aspect of the development, from infrastructure to design.

“For example, we are planning to generate a biodiversity net gain of at least 10% on-site, protecting and enhancing local wildlife habitats.”

Mr Nardini says he “understands some concerns have been raised” about the impact on the neighbouring woodland.

“Our proposals take the preservation of this important natural asset very seriously,” he said.

“We are implementing a minimum 20-metre-wide planted buffer zone and a five-metre recreation zone around the woodland, exceeding the government’s recommended 15-metre minimum buffer.

“These measures have been rigorously tested in recent case law and validated by a government planning inspector.

“In addition to protecting the ancient woodland, we are enhancing it.

“Our plans include retaining and strengthening existing trees and hedgerows; creating new green corridors that replicate historical field patterns to improve ecological connections with the ancient woodland; and shifting the boundary from its current farming edge of two metres to a safer, more sustainable distance.”

It is hoped a decision on the scheme will be made by the end of the year.