The MP for Sittingbourne and Sheppey is calling for Swale Borough Council's administation to resign after it said it could not accept £38m offered by the government to upgrade two roundabouts on the A249.
The coalition council said it would not be "bounced" into a decision that would lead to unsustainable housing projects.
Deputy leader Mike Baldock said: "This money comes from the Housing Infrastructure Fund and is intrinsically linked with the delivery of ever more housing.
"We strongly feel however that this is not a basis on which we can agree to support this funding.
"Road improvements are necessary, but must be part of a package that tackles all the infrastructure failings caused by the existing increase in housing, rather than being the means to deliver even greater housing numbers."
MP Gordon Henderson accused the council of being "obsessed with environmental issues".
He said the money "was not intended to open the way for more housing, but to service the developments that have already been built, or are in the pipeline, and for which planning permission has been granted."
"There is no doubt that those housing developments will still go ahead.
"However, without the necessary improvements at Grovehurst and Key Street, the increase in traffic will simply make worse the current congestion on the A249," Mr Henderson added.
