A developer has been accused of trying to make a "vast profit" by attempting to sell a former prison for £7m more than it paid the government.
City and Country paid £3.25m for HMP Dorchester in 2014 and is now touting for offers in the region of £10m, having won approval to build 185 homes.
The move has been described as "inappropriate" and "appalling".
The firm said it had been open about the prospect of seeking a "development partner" to progress the site.
The Ministry of Justice (MoJ) said it had the right to claim back some of the profit if the site was sold.
The prison closed in 2013 and the £3.25m paid for the site the following year was the market rate as assessed by the District Valuer.
Steve Brissenden, who lives close to the prison building, said: "It's inappropriate that the taxpayer has already paid for that building and now a private developer is set to make a vast profit on it, and the local need has not been considered."
Alistair Chisholm, ward councillor for Dorchester North, said: "I am appalled. Since it was bought, the site has been sitting idle for five years.
"It could be bought as a community asset - £3m might have been affordable but £10m is nigh on impossible.
"City and Country is not interested in developing it. Instead they want to sell it for a lot of money for doing nothing."
A Prison Service spokesman said a clause in the sale of the site meant the MoJ had "the right to seek more money for the taxpayer, which will then be reinvested back into the prison estate".
However, he would not give details of how much that might be.
Property expert Henry Pryor said: "The business of property developers is buying land, getting planning permission and selling it on.
"Eventually someone will develop the site and build the properties. There is nothing odd or suspicious in it."
City and Country paid £5m for four former prisons, the others being Gloucester, Shepton Mallet in Somerset and Kingston in Portsmouth.
Parts of the Gloucester site have also been put up for sale.
In August 2018, City and Country said its plans for the Dorchester site had stalled.
In a statement, it said: "Since acquiring the prison, and throughout an extensive consultation process, we have been clear about the possibility of us looking to secure a development partner to help take the scheme forward.
"Whilst this process has been ongoing, we have been working on site to make sure that conditions relating to our planning permission have been carried out."
A spokesman said the developer was originally only looking to sell the new-build element of the scheme but put the whole site on the market after "interest" was shown.
It is believed Martha Brown, the last woman to be hanged in Dorset, is among former inmates buried at the site.
Her execution was witnessed by the author Thomas Hardy and was said to have inspired his novel Tess of the d'Urbervilles.
Oscar-winning screenwriter Julian Fellowes has led calls for all bodies at the site to be exhumed.
Officials have since agreed the remains of any exhumed bodies would be given a Christian burial.