A 25ft muddy mountain of earth has been dumped at the back of residents’ homes.
The mound of clay and soil has arisen on a field backing onto houses in Thomas Wakley Close, Colchester.
Developer Crest Nicholson has admitted responsibility and has said the mound will remain for at least three months.
It is building 248 homes on the land which is part of the former part of Severalls Hospital site.
Luisa White, of Thomas Wakley Close, said: “They mountain is three quarters the size of the houses.
“It is causing problems because of the water system. It is soiled clay and the mountain of earth is like a sponge, releasing the water towards our properties because the land is tilting towards us.”
Mrs White said homeowners’ gardens in the cul-de-sac were only five metres long and they were now faced with sight of the mound of soil from their rear windows instead of open fields.
“It is absolutely horrendous and there were plenty of other places to put it,” she added.
Mrs White said a trench had been dug by the mound to drain off some of the rain water.
But she said she was worried if it filled with water that would seep towards people’s properties and their foundations.
“This is putting our properties at risk of subsidence,” said claimed.
A Colchester Council spokesman said: “When this matter was first reported to us, the planning service fully understood the residents’ emotions regarding this matter and we have acted upon these accordingly.
“Consequently I can confirm that the council are speaking to the developers, Crest Nicholson, and they have notified us that the earth mound is a temporary arrangement and there are plans for it to be moved.
"We hope that residents will benefit from this soon and their expected normality is restored.”
A spokesman for Crest Nicholson said: “Crest Nicholson is fully aware of the mound of earth which acts as a wind and noise barrier to the construction activities.
“The mound will be removed in March following the installation of drainage connections.
"In the meantime, our construction team has thoroughly assessed the possibility of the clay holding water which could lead to flooding, and we are confident that it poses no risk.”