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Mt Barker Residents Association secretary Chrissie Thomson said yesterday the gravel road was too dangerous for camping, and the association had spent years trying to get it upgraded.
"In spite of multiple crashes and safety concerns created by a lack of visibility from dust and the vertical alignment, it seems that now camper vans are being invited to camp along the road. Ludicrous."
A spokeswoman for the Queenstown Lakes District Council said the sign was new but the areas where camping was and was not permitted had not changed.
"The sign ... was simply installed to support our enforcement team in giving out infringements to campers flouting the rules. This is in response to a number of complaints from local residents about people freedom camping near the Cardrona River."
Pictured with Ms Thomson are association members (from left) Wayne Hudson, Russell Lovelock, John Coers and John Binney.