Plans to turn an outbuilding into a madrassa and prayer rooms is due to go before councillors on April 16.
An application has been submitted to convert the outbuilding behind a home on Park Road into an Islamic religious school.
If approved, the new madrassa will coexist with a neighbouring schoolroom, which has reached capacity.
According to the plans, the new proposed madrassa will operate daily from 4pm to 6.30pm with 15 to 20 pupils. It will be open for daily prayers between 7.30am and 8pm.
Six existing parking spaces will remain on the site with a disabled car parking space also provided.
Although Banbury Town Council has not objected to the proposal, concerns have been raised over traffic movements and parking near the site.
Councillor Surinder Dhesi, Cherwell District councillor for Neithrop ward, said residents on Park Road were concerned over users parking cars on corners, which made it ‘dangerous’.
She added the nearby mosque on Merton Street should be used instead as there was plenty of parking available there.
But highways at Oxfordshire County Council (OCC) said it did not recommend the application be refused.
Thomas Cockhill, area liaison officer at OCC said: “The site was providing a number of parking spaces and within the vicinity of public transport links.
“It is my opinion the parking implication associated with the proposal does not present “severe harm” as required in the recent Government guidelines to warrant a recommendation for refusal.”