Hart Council officers have informally spoken to land-owner Qinetiq about housing on its DERA site at Pyestock and the firm was even prepared to fund assessments.
But Hart's full council has decided not to include the site for housing in its Local Plan development blueprint.
The council's influential cabinet had considered the possibility of including the site.
However, it decided against it, although full council was due to make a final decision when the item was up for discussion on Thursday night.
But Hart Council chairman Brian Leversha told members that as the site was not included in the recommendation, it could not be debated.
However, the ruling came under fire from a number of councillors.
Cllr David Neighbour, deputy leader of the Liberal Democrat group on Hart, pointed out that the cabinet had narrowly voted by four votes to three not to include the site.
"I am sorry we are not keeping the Pyestock site in (the Local Plan) because it looks worthy of discussion," he said.
Independent Denis Gotel said: "I'm in full accord with my colleague — he's taken the words out of my mouth."
Another Independent, Susan Band, asked: "Does this put the site at Pyestock beyond any further consideration?
"I think that is a shame because it is a large part of land and I would like to discuss what we would like there."
But Cllr Stephen Parker, who first presented the report to the cabinet, said: "The site is already in the Local Plan with a use and the cabinet decided not to put it to a different use."
The 107-ace site is earmarked for commercial development in Hart's Replacement Local Plan, including a mix of storage and distribution uses, large-scale office and staff accommodation, new research and development uses and a new hotel.
But the report to cabinet said that officers have informally raised the issues of exploring the potential for a residential development.
It said the site, which has good transport links, given its proximity to the M3, could provide between 1,000 and 2,000 homes, creating "a small self-contained community with appropriate supporting facilities".
Qinetiq said it was prepared to fund a number of assessments, including traffic, ecological, landscape and noise impacts.
Hart was interested in the possibility of developing the site for housing, pointing out it is important to have some potential reserve development sites for the future, so it could choose where to build if needed.
The cabinet was told that if the government felt Hart was not building enough houses, it could invoke Policy H4, which could mean the council having to find sites for 1,500 houses within six months.