Local residents last year won a battle against developers seeking planning permission to turn the former ScottishPower headquarters into an 80,000 square foot supermarket, saying the move would "rip the heart out of" the town's high street retailers.
Now the council's draft masterplan has recommended that around 50 to 60 per cent of the site should be given over to "employment/business uses" - opening the door to a fresh supermarket bid.
The new owners of the site, BL Developments, have admitted they may have no other option than to give a huge chunk of the site over to retail in order to follow the guidelines.
Diana Cairns, of Portobello Campaign Against the Supermarket (PCATS), which successfully fought the site's previous owner, Duddingston House Properties, in a public inquiry into a planning application for a supermarket on the land, said the community was worried again.
"We have had public discussion on this and what people wanted was good-quality, affordable housing to be built on the land, which is something BL Developments has been very positive about.
"I have, on many occasions, been promised by councillors that this would be a blank sheet of paper to be looked at during the public consultation phase and that is definitely not what it is." She added: "Developers will just have no other option than to put a significant retail development on the site.
"There is just no demand for office blocks in the area - you just have to look at the empty office space in Edinburgh to see that."
Phil Myerscough, director of BL Developments, said retail would be the only viable option to create employment on such a large area, due to the lack of demand for office space in the area.
He said: "We recognise that there has to be some sort of commercial activity on that site, but we are surprised by the specific element within the draft plan.
"If that element is maintained right the way through the masterplan process, we will have to deliver a development that meets those requirements. The obvious way to do that would be to create retail space.
"However, this is not what we want to do if possible - we are a residential developer and have been working with local residents to find out what they want on the site."
He added: "I don't think there is really a demand for office space in that area, except for a few small start-up business units, and perhaps some artists' studio space, which I was planning to incorporate in the development with residential housing. However, this would not be enough to meet the requirements in the draft plan.
"We are hopeful that the council will take on board the concerns expressed by the community, and indeed, our own representations, in compiling the final draft."
An informal public consultation into the draft has been launched, which will run until July 21.
A council spokeswoman said: "The council is informally consulting with local community representatives and councillors on the proposed masterplan until July 21.
"After that date we will consider the feedback and discuss this with the developers and local representatives before any formal planning applications are made."