The funding needed for homes in Cherrywood could be pulled if the houses are not guaranteed to be affordable.
The goverment's agreed to spend money on land so that private companies can quickly build 8,000 units at a reasonable price but a row has now erupted over how much they'll be sold for.
Last March, local authorities were allocated €226 million for infrastructure like roads and water mains that were necessary to facilitate the development of housing on the privately-owned land in Cherrywood. However, a deal has yet to be reached on price and the number of homes that will be available.
Dun Laoghaire Rathdown County Council has been allocated €15 million to provide the infrastructure but the local authority has missed the July deadline to submit the details of their affordable housing deals to the Department of Housing.
"It would be an outrage to give public money, taxpayers money to private developers to assist and support their enterprise and have no meaningful contribution", Local Senator Victor Boyhan told 98FM News.
"An agreement must be reached that they can give more social and affordable housing as part of this deal".
Previously in 2015, the government said affordable homes were those costing €300,000 or below but more recently the Housing Minister Eoghan Murphy said affordability was relative top the location.
Houses and apartments in the Dun Laoghaire area cost an average of €467,000 in 2015.