Around 20 caravans and motorhomes are parked at the Straiton park-and-ride facility on the southern outskirts of the Capital.
Council officials said that the travellers had been served with an eviction notice which gives them until Monday to leave the site.
However, should the notice be ignored, the local authority will apply for a court order which would allow police to take action to move the travellers on.
Local people living next to the park-and-ride site complained about a growing pile of rubbish which had appeared next to the caravans.
One man, who did not want to be named, said: "This started a few weeks ago. There was just one or two caravans at first, but more and more have been arriving.
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"The council have spent a fortune on that place and it's fantastic.
"More and more travellers have been arriving and they have now moved into three sections of the car park – it's not right."
Yesterday, travellers at the site declined to speak to the Evening News, although one woman said she was unsure about how long she planned to stay.
A council spokesman said the travellers had been served with an official request-to-leave notice after contravening a traffic regulation order.
He said: "They (the travellers] have until Monday night to move. If they do not do so, we will apply for a court order."
A police spokesman said the matter was currently one for the city council, with officers providing only a supporting role.
Edinburgh has just one official site for gypsies and travellers, which is operated by the city council at North Cairntow, Duddingston, and has just 20 pitches.
A spokesman for the Equality and Human Rights Commission Scotland said: "Scottish gypsy travellers have a right to live in Scotland and local authorities have a duty to ensure that adequate provision is made for gypsy traveller accommodation and should do more to meet that duty.
"We know that there is a large pocket of local opposition and we know that Scots gypsy travellers can face some of the most stark discrimination and prejudice of any community, experiencing low educational attainment, unemployment, poverty and poor health as a result.
"Later this year the Commission will launch a report into the provision of accommodation for Scottish gypsy travellers where we will make a series of recommendations for resolving some of the current and seemingly intractable tensions."
Part of the city's strategy for cutting congestion, the Straiton park-and-ride site opened last October and cost 4.5 million to develop.