A public inquiry into proposals for a 7,500 square metre 24-hour Tesco store on the Kent seaside town’s seafront opened yesterday (Tuesday).
Margate is one of 27 "Portas pilot" towns which have shared a £1.2m government fund to revive their high streets.
A letter from Portas expressing her concerns about the scheme was handed in to the inquiry when it opened.
Landlord Freshwater submitted a full application to build the store and refurbish neighbouring flats, Arlington House, in January 2011.
It appealed to the government in October 2011 on the grounds of non-determination because Thanet District Council had not made a decision on the scheme.
In a letter to the Pickles, Portas, who recently filmed her new TV series in the town, said: "A common concern raised by a number of the Portas Pilot towns was the pressure and competition posed by out-of-town and edge-of-town supermarkets.
"It is clear to me that any out-of-town or edge-of-town supermarket proposal will seriously undermine the town centre regeneration efforts."
She also said that her recommendation in the Portas Review into town centres, published in December, recommended an ‘exceptional sign-off’ for all new out-of-town developments, something the government said it will not implement.
The letter stated: "My recommendation was based on a real concern that local councils have neither the funds, not the legal clout to stop undesirable out-of-town developments from progressing.
"In Margate I am now witnessing the realisation of these fears."
The letter went on to say that the proposed store would "reduce vital car parking space for the town centre and divert customers away from local and independent high street shops".
It added: "This is a disturbing threat to the regeneration of Margate and is counter to all the work currently being undertaken in the town."
The inquiry is scheduled to close on Friday.