A water company has admitted a giant sewage plant close to homes on a greenfield site is going to smell.

On the first day of a public inquiry into its plans to build a £200 million wastewater and sludge treatment works at Lower Hoddern Farm, Peacehaven, Southern Water admitted it would be impossible to stop the works from emitting a foul odour.

Hundreds of protesters concerned about smell, noise, traffic and visual impact attended the hearing at the Meridian Centre, Peacehaven yesterday.

During cross-examination, Damon Elliott, of Southern Water, admitted there was no way of stopping the plant from smelling. He told Matthew Horton QC, for East Sussex County Council: "You can't eliminate the prospect of there being odour at times. Therefore you have to consider the location of the plant carefully."

The proposed site is closer to homes than other locations on the company's original shortlist, including Newhaven North Quay.

Southern Water said the best technology would be used to keep odour to a minimum. It would not be as bad as the works at Pebsham, which caused problems for residents when it had open tanks, because all the tanks would be covered. And, unlike at Pebsham, any unloading of lorries would be indoors.

The five-week inquiry will determine an appeal by Southern Water after East Sussex County Council failed to decide on its original planning application within the 16-week limit.

Overseen by planning inspector Ken Smith, it will help Secretary of State Ruth Kelly and Defra decide whether to give the go-ahead.

A decision could take many months.

In the meantime, an identical application is passing through East Sussex County Council's planning process. Officers have recommended it for approval, subject to a list of conditions.

East Sussex County Council has said it may apply for the inquiry to be adjourned, depending on what happens with the other application.

At yesterday's inquiry, Jean Gold, of Lindhouse Close, said: "Peacehaven residents have been fighting for seven years. East Sussex County Council has let us down."

Peacehaven pensioner Celia Poulter, carrying a placard saying, "No sewage on Greenfield sites", said: "I don't see why we should take Brighton and Hove's rubbish."

Other placards read: "Wrong plans, wrong place" and "Peacehaven residents say no to sewerage proposals for Peacehaven by Southern Water".

Some residents are worried the sewage might bring a risk of disease. Mr Elliott said that neither HIV nor hepatitis C is transmissible through water and there is no evidence poliomyelitis is transmissible through recreational water use.

The works is necessary to ensure the UK complies with the EU Wastewater Directive required to be put into place by the end of 2000. Proceedings against the UK began last July and Southern Water has been issued with a notice requiring it to comply by March 31 2010.