"It must have been very unnerving for people to go in to be confronted by that group."
Cllr Sue Lane added:
"We can't afford to have these things happening in town.
"How detrimental that could be when the tourists come back."
The mayor, Cllr Sam Skyrme-Blackhall, added: "Staycations are going to be huge, and this is a very big worry as we approach the season."
The council was discussing Penally Camp at its virtual meeting on Tuesday, February 16 with Penally's county councillor, Jon Preston, when members pledged their support to the village.
The council is to submit its views on the suitability of the camp to the Independent Chief Inspector of Borders and Immigration.