A local lockdown in Oldham could prove "catastrophic for business", the council leader has warned.
Labour councillor Sean Fielding urged the government not to impose stricter measures in the town.
Oldham has one of the highest rates of new infections in England and is one of the areas currently subjected to tightened coronavirus restrictions.
Health Secretary Matt Hancock said: "There is a big challenge in Oldham, the numbers are clear about that."
Mr Fielding told BBC Radio 4's Today programme his council was "strongly making the case" that a local lockdown "would not be the right solution for the wave of the pandemic that we're seeing".
He said "household transmission" was driving infections in the Greater Manchester town, most cases were among the working-age population, and there had been little increase in hospital admissions or deaths.
"We already have youth unemployment of 9.5% and 15% of unemployment generally so [a local lockdown] would be really, really catastrophic for businesses and for the working-age population in Oldham," he added.
"It's different to Leicester because Leicester never really properly reopened."
By Daniel Wainwright, BBC England Data Unit
Oldham currently has one of the highest rates of new infections in England, although it is some way below the figures that were being recorded in Leicester when its own tightened lockdown was imposed.
In the week to last Friday, 14 August, Oldham recorded 225 cases, one more than the week before and a rate of 95 per 100,000 population. The average was 28 new cases each day.
Leicester's restrictions were imposed at the end of June and Health Secretary Matt Hancock said at that time its seven-day infection rate was 135 cases per 100,000 people.
Local figures for Oldham show the greatest concentration of new cases came from the Alexandra Park area, with 44 recorded in the week to 14 August based on the data released on Tuesday evening.
Another 33 were recorded in Werneth.
Mr Fielding warned that hundreds of businesses in Oldham had made themselves "Covid-secure, spent money in doing so, reopened, traded for a short time".
"The likelihood is many of those having done all of that would simply not be able to reopen once the restrictions are lifted again," he added.
But Mr Hancock did not rule out a local lockdown, telling BBC News "we will do what is necessary".
"There is a big challenge in Oldham, the numbers are clear about that," he said.
"We see from what's happened in Leicester over the past few weeks that where we put a local lockdown in place it then has been effective."
Mayor of Greater Manchester Andy Burnham said he would be writing to Mr Hancock, arguing there is "no case" to impose further restrictions on the town.
He said enhanced Covid-19 measures in Greater Manchester were working and that the "highly targeted, proportionate" approach should be continued.
"So there is certainly no case today to impose further restrictions on Oldham beyond the prohibition of social gatherings in the home," Mr Burnham said.
He is also calling for businesses such as beauty parlours and casinos to be permitted to reopen across Greater Manchester, except in Oldham, in line with an easing of cornavirus restrictions in England.
Meanwhile, Labour MP Jim McMahon wrote to Mr Hancock asking for a further two weeks to see the impact of local interventions without the "blunt tool" of a lockdown.
The letter, which the MP for Oldham West and Royton posted on Twitter, was co-signed by fellow local MP Debbie Abrahams and Labour deputy leader Angela Rayner.
Oldham Council has enlisted the help of Game Of Thrones actor James Cosmo to warn residents that "lockdown is coming" unless they abide by coronavirus guidelines.
Cosmo, who played Jeor Mormont, Lord Commander of the Night's Watch, told residents to "stay safe and follow the guidance".