Three hundred families at Suva's Jittu Estate squatter settlement have been told they must relocate by the end of the week.
The Fiji Times says this is to allow for a housing pilot project by the Ecumenical Centre for Research, Education and Advocacy - ECREA - which starts next month.
A settlement resident says there has been tension at the settlement since a group of soldiers and ECREA officials visited last week.
He said many were frightened because the military was involved.
Last month, ECREA director Father Kevin Barr and Commodore Frank Bainimarama came to survey the area.
Father Barr says the project should not be looked at negatively as they were trying to help the squatters.
He told the Times that workers need to bulldoze the place to start building.