The developers at Cardea in Stanground were threatened with court action by Peterborough City Council after digging a large hole without planning permission.
Persimmon Homes ignored warnings from the council to stop its digging until it was threatened with an injunction - a court hearing to restrain a breach of planning control.
The huge hole is next to St Michael’s primary school.
A council spokesman said Persimmon was granted permission to move soil of around one metre deep from one part of the site to another. He added: “We were subsequently alerted that the excavation was much larger than we had been led to believe and we asked the developer to cease works.
“Work however continued until we advised that we would be seeking an injunction and at this point works stopped.
“A planning application has now been received to backfill the hole, however we cannot currently progress this as it contains insufficient information.”
A fortnight ago the council’s planning committee approved an application from Persimmon to build another 153 homes in Cardea, taking the total to more than 1,600.
Stanground South councillor Ray Bisby said: “I want to know how often this is happening. It can’t just be Persimmon. We have had to ask children to come away from the hole. There was only a Heras fence - children were lifting it up and playing in it.”
The council said it cannot issue sanctions against the developers for doing the works without permission.
A Persimmon Homes East Midlands spokesman said: “Following a misunderstanding by a contractor relating to the extent of the excavation, Persimmon Homes East Midlands halted work immediately on all digging works when notified and proceeded to commence filling operations.
“This was unfortunately stopped by Peterborough City Council until planning permission has been obtained.
“As a responsible developer we are working closely with the local authority to ensure the excavation is filled in as soon as permission is granted and to ensure the fence is checked several times each day for security to prevent any unauthorised access.”