Owners of holiday homes in Bundoran are threatening legal action over what they claim is a major health hazard.
The owners of the homes say Donegal County Council could face court action if it doesn't solve a raw sewage problem on their estate.
A committee of council officials and representatives of owners of Armada Cottages was set up two weeks ago to negotiate a settlement.
Meanwhile, the council moved a Traveller family on its housing list into a home on the estate despite owners' claims that there is a health hazard.
They say raw sewage is leaking from a pipe into the nearby Drowes River. They also claim there is illegal dumping of rubbish on the riverbanks.
Bundoran councillor Michael McMahon, a former mayor of the town, said a new sewage system was planned for Bundoran by the end of 2014 and that should resolve the problem.