Andover Early Learning Centre in Islington, London, is to close after 30 years to make way for Mitford Children's Centre, which will be run by charity NCH.
The Mitford Children's Centre will provide a 70 square metre balcony overlooking a busy main road, which parents say is unacceptable.
The centre will have an open space at ground-floor level, which will be shared with the centre's other users, including those at stay-and-play sessions, but children will have to be accompanied by adults in a lift to access it.
Rachel Dixon, whose son Joseph is three-and-a-half and has undiagnosed special educational needs which affect his mobility, is concerned that the loss of the outside space will affect her son's development.
Joseph was unable to walk independently when he started nursery last September. Ms Dixon said, 'In that time he has learned to walk. The outside play area at Andover surrounds the nursery. There are sandpits, plants, climbing frames - it's a great place for children to climb and jump in. The thought of him going to nursery with a balcony where he won't be able to do that is depressing.'
Ms Dixon is also concerned about the loss of special educational needs expertise. 'I have felt extremely supported as a parent of a child with special needs. I couldn't ask for better,' she said.
Islington council's consultation with Andover centre staff and trade unions started on Friday.
Liberal Democrat councillor Ursula Woolley said the balcony was 'the kind of thing you have to do in an inner city, because space is at a premium.'
Renovating the Andover centre was not an option, she said. 'It's too small a site and we could not have had a full children's centre.'
She said the centre would close by the end of the year, depending on when places were found to suit the families at Andover.