Protesters held an hour-long sit-in inside council chambers against plans for a 12,000 home garden town.
Opponents to the Otterpool Park development - which could become home to 29,000 people around Folkestone Racecourse, Sellindge, Westenhanger and Lympne - filled the public gallery at Shepway District Council's cabinet meeting last night.
Councillors agreed to move forward with developing a formal "expression of interest" to the government.
The sit-in was held to "hold the council in contempt" over claims the council lied to residents regarding its plans for farmland the council bought before Christmas.
Police were called to remove some of the protesters staging the sit-in but had left before officers arrived.
The protest stemmed from a grievance that one part of the agenda for last night's meeting was exempt and would not be heard in public.
They have challenged the legality of the exclusion of the public from that section of the meeting claiming not enough notice was given as per the council's own constitution.
It was made exempt due to "commercially sensitive" material being discussed, the nature of which has not been disclosed by the council.
Councillors never returned to the chamber after the conclusion of the public session last evening and moved to another room in the Civic Centre to hold their closed meeting.
A slow-clap was started in the public gallery as the last councillors and council officers drifted out of the room.
But it is understood the subject of the closed session could have been about a third party involved in land negotiations for the parcels of land the council needs to secure.
The owners of Folkestone Racecourse (Arena Racing Company) have already confirmed they are working with the council over plans for the old racecourse which closed in 2012.
Residents say they feel betrayed by the council saying it failed to be open and transparent about the plans for the 357-acres of farmland it bought in December for £5.2m.
SDC originally said it was a long-term investment purchase and would continue to be leased out for agriculture.
This was despite plans already being in the pipeline from the government asking for expressions of interest to be submitted for new garden town or villages around the country.
Chancellor George Osborne announced the plans officially in February's budget.
The council has been looking at ways of developing the land around junction 11 for its "economic potential" since 2014, council papers reveal.
But residents outside the meeting said it was "frightening" how quickly the plans were developing.
Others added they did not believe behind the scenes work had only just started.
David Plumstead, co-ordinator of the Otterpool Newtown Coalition Campaign, said: "I think we've made the point. We've got the result we want.
"It's quite a complicated issue but there's a fundamental objection. It's bigger than Hythe.
"But the way the council went about the business was a lie. They told us a lie.
"Up to March it was as an investment and there was no intention of a development.
"We're holding our council in contempt that they lied and led us by the nose." Protest co-ordinator David Plumstead
"We're holding our council in contempt that they lied and led us by the nose."
He added the reason for the sit in was because of their claim there was lack of public notice that they would be excluded from the meeting.
Mr Plumstead said he planned to take the issue to the government's communities secretary Greg Clarke, who would ultimately make the decision of whether to approve Shepway's application.
"The thing they said that would exclude the public didn't appear until this afternoon," Mr Plumstead said. "There will be an electronic record.
"I think they thought they'd better do it in a hurry before it became a can of worms.
"Yes, it's rouse expressing an interest. If you let this to grow legs it will develop it needs to be stillborn."