Southwark Council has agreed to transfer a plot of land on the Aylesbury Estate to a developer in order to develop 165 new flats.
The deal will see the developer, which has yet to be named, develop the site on condition that it delivers 50 per cent affordable housing.
Of these, three quarters will be delivered at social rent levels. Seventy per cent of the entire development will be family homes.
Cabinet member for regeneration Fiona Colley said the level of affordable housing was “a major achievement in the face of government changes to housing policy”.
The developer will pay the council for the land in installments, with extra payments kicking in if sales receipts exceed expectations.
A section 106 agreement will generate further funding, which the council says it will reinvest in the Aylesbury Estate.
Subject to planning permission being approved, demolition of existing blocks on the site will start in early 2013, with the development completing in 2015.
A new website for the local community, which explains the council's plans for the regeneration of Old Kent Road, has been launched