The Department of Justice and the Irish Prison Service have been accused of opening an low-security prison at Harristown House, Castlerea, Co Roscommon.
It is claimed this was done without proper consultation and was against the views of the majority of people living in the area.
Two inmates concluding prison sentences for murder were among a batch of five prisoners transferred to the open prison at Harristown House in the last seven days.
The low security facility is eventually due to accommodate up to 18 temporary release prisoners.
A spokesman for the Irish Prison Service said "public safety is paramount" and all of the inmates have been appropriately assessed prior to their transfer to Harristown House.
He said: "They should not leave the environs of Castlerea Prison or enter the town unless they are authorised by the prison services or governor to do so."
The inmates are also required to be in Harristown House between 10pm and 8am.
Any prisoner on temporary release is also barred from entering a licensed premises.
Local Fianna Fáil Councillor Paschal Fitzmaurice said inmates "can actually walk out the gate and walk down the street down to the town".
He said he believes Castlerea is being used as a "test case" by the IPS as an alternative to expensive prison accommodation.
While welcoming a commitment not to house sex offenders in the unit, Cllr Fitzmaurice said: "99 out of 100 that go through that facility will be fine but it is the one I worry about."
"It's a new model for Castlerea which we don't want. There is absolutely zero benefit in it for the people of Castlerea," he said.
He admitted Fianna Fáil had lobbied for a prison in Castlerea but said: "People signed up to a closed prison, they didn't sign up to an open prison."
Fine Gael Cllr Michael McGreal accused his colleague of "scare mongering" and said he had faith in the prison authorities.
"This kind of development seems to be in keeping with what happens in prisons ... this is a kind of a half way stage, a kind of an open facility."
Mr McGreal claimed the prison system is under pressure and "too many people are being put into prison for reasons that do not merit a prison sentence, such as non payment of fines".
Accusing Fianna Fáil politicians of "double standards" in lobbying for a prison in Castlerea, Cllr McGreal said: "I have yet to be approached by one person in Castlerea who expressed any fear or fright."
Independent TD Denis Naughten claimed "the big issue here is that there was a lack of consultation in advance".
He also wanted clarity on what access the prisoners would have to Castlerea town.
"I would have concerns in terms of what resources are being made available to the section of the prison that does the risk assessment," Mr Naughten commented.
"There are no prison officers assigned to that unit," Mr Naughten said. "Basically these prisoners are outside the prison walls and they can come and go," he added.
