Holyland residents have claimed that young people are coming from all over Northern Ireland to party and illegally stay in the south Belfast student houses for £20 a night.
Brid Ruddy said the area was now "a hotbed of Covid-19" with students causing "circles of infection" that can easily spread.
And she voiced growing fears that the situation is spiralling out of control with Freshers' Week just around the corner.
"A big issue is lack of enforcement - on littering, on alcohol being drunk in the streets, on anti-social behaviour - and that makes this virtually a no-go area for law and order but a go-to area for parties," she said.
"Since the end of April we've had them here. Parties start at around 11pm and run into the night, usually until around 4am. They can last for two days.
"I've been in conversations where it's been reported that people have been letting out their houses for £20 a person for the night so people travel here from all over to party."
Last week, the PSNI issued 10 community resolution notices and eight fixed penalty notices, which carry a £60 fine, after responding to a number of parties at residential addresses in the Holyland area.
Some received community resolution notices, while the behaviour of others resulted in fixed penalty notices, following a series of arrests for a range of offences.
"The people cautioned last week were in their late 20s, early 30s so it's partyland for people from all over and the pressing issue for us is the Covid threat; there needs to be a long-term solution needs to happen now," said Ms Ruddy, a member of the Holyland Residents' Association.
"Residents know the worst is yet to come. Freshers' Week is going to be an extension of the summer madness."
She added: "The Holyland was supposed to be a special action area. An action plan was supposed to kick in but Covid has wrecked that."
Alliance South Belfast MLA Paula Bradshaw described the Holyland as having become "a massive party venue".
"Students started to come back in September and immediately we were getting reports of house parties," she said.
"They are getting their carry outs, they are drinking in front of their houses, some are hanging out the windows or sitting on top of the ledges; it's partyland here.
"The streets are full of people partying, going between houses, no social distancing, no hygiene control measures and no idea what they need to do if they think they've contracted the virus and need to get tested.
"I'm worried that the Holyland will become a hotspot for Covid-19 and spread it across Northern Ireland."
Ms Bradshaw called on students and universities to take responsibility.
"We're in a life-threatening pandemic but students appear to be ignoring that and they're being reckless with other people's health," she said.
"There should have been specific advice in the guidance for students living here. Students should not be allowed to go home at the weekends, for example.
"The universities need to come down on these students harder and quicker because their behaviour has the potential to be deadly."
She added: "People are very concerned about the spread of the virus in the area. The potential for community transmission is huge here. Residents are worried and nervous but they're also very angry."
Mr Bradshaw also said guidelines need to be drawn up for student accommodation because some Houses of Multiple Occupation have up to nine bedrooms.
Ronan Kelly (19) from Armagh, who's training to be a barber at Belfast Met, said he's been in the area for a week, although his classes haven't started yet.
"Nobody can have any confidence in the rules," he said.
"It's just not working. And it's not all the students' fault.
"Some of the residents are always on our case.
"We try to keep the noise down but at the end of the day it's the Holyland."
Ronan said students believe the rules established by Northern Ireland Executive are nonsensical.
"You can go and sit in a pub with as many people as you like but you can't sit in your front garden," he said.
"It's ridiculous when we all know there is far more room for social distancing on the street."