FEARS it's only a matter of time before the Ashchurch Army depot is sold were strengthened after military bosses announced a public consultation into homes on the site.
The MoD has emailed all Tewkesbury borough councillors to inform them of the planned discussions.
Any housing development would come at the expense of the 700 mostly civilian jobs.
The letter states that discussions were taking place between MoD officials and borough council officers about the site's potential redevelopment.
The Defence Infrastructure Organisation said a public consultation event on the plan would take place towards the end of March.
But the Ministry of Defence insists it has not made a final decision on the future of its vehicle storage depot.
The letter said: "This will form part of pre-application discussions currently taking place between MoD officials and officers at Tewkesbury Borough Council, in relation to potential redevelopment at MoD Ashchurch.
"Prior to undertaking this consultation it was felt important to make contact with district councillors to provide background to the proposals and to provide an update with respect to the current status of the site."
Joy Shillam is chairman of the parish council for Northway, the large housing estate close to the camp.
She said: "The future of the site has been in doubt for a long time. I feel sorry for the people that work there. If it does close, it's going to make a lot of people unemployed."
Military bosses are preparing a planning application for housing on the site. It is linked to the Joint Core Strategy (JCS) being drawn up by the district councils for Tewkesbury, Cheltenham and Gloucester suggests 2,100 homes be built on the camp and fields close to it.
Tewkesbury MP Laurence Robertson has been trying to save the camp from closure and says talk of building houses is premature. He said: "I need to make the MoD aware that the JCS is far from settled."
He added there were also concerns over whether the site might be contaminated and whether development would worsen flooding in the area.
Tewkesbury Borough Council's planning policy manager, Nigel Gilmore, said: "As such, any discussions with council officers have been very preliminary and are without prejudice to any potential decision by the council relating to any future proposals from the MoD.
"There is now a requirement for landowner and developers to undertake pre-application public consultation, which is the purpose of the letter from the MOD to our councillors."