A £1.5bn plan to rebuild a shopping centre in south London has been shelved after the borough's Green-led council demanded more affordable housing.
Landsec said it had decided to "de-prioritise" the Lewisham Shopping Centre redevelopment, which would have created 1,700 new homes and accommodation for hundreds of students.
It blamed opposition from Liam Shrivastava , the Green mayor, who refused to back the plans without more homes for lower-income households, as well as those in "exceptionally challenging" economic conditions.
Beyond new housing, the project, slated to start next year, would have included a new 500-capacity music and arts venue and a rooftop meadow.
The decision to mothball the redevelopment will hit London's housebuilding industry, which is mired in a construction slump.
Housebuilders are starting to pull out of the capital altogether, citing concerns that it has become uninvestable. Taylor Wimpey, one of Britain's biggest developers, has said it will stop building new homes in the city.
Jennie Daly, Taylor Wimpey's chief executive, told The Times earlier this month that building in London was "fundamentally broken" and that the incentive to take on risky developments had "evaporated".
Berkeley, another major housebuilder, said in recent weeks that it was battling "extreme uncertainty" after authorities delayed or halted plans for thousands of new London homes across different projects.
Rob Perrins, Berkeley's chief executive, told The Telegraph: "At a time when we should be fighting to attract investment and build more homes, we're fighting it off. The result is fewer homes, less growth and a worsening housing crisis."
London is on course to build just 20pc of the Government's annual homes target of 88,000 , according to figures from research firm Molior.
The Lewisham project depended on Landsec gaining control of a former Citibank tower next to the shopping centre. Local news site The Greenwich Wire first reported that the council had decided to drop the plans.
But after the Greens took control of the council in May, Mr Shrivastava said he would not help the developer unless it added more affordable housing.
Of the 1,744 homes planned for the redevelopment, 98 would have been offered to social tenants for rent.
A Landsec spokesman said: "Higher interest rates, increased construction costs and more complex regulations have made development in London increasingly challenging.
"Recent statements from Lewisham Council also make clear that the administration is not able to support the next phase of land assembly needed to unlock delivery without a significant increase in affordable housing. This would require material changes to the masterplan which would prolong the programme."
The spokesman added: "This position, combined with the exceptionally challenging economic conditions, means that we no longer see a sufficiently certain route to delivery."
Mr Shrivastava said his administration was "laser focused on delivering genuinely affordable housing". He added: "I've consistently said the level of social rent homes in this scheme needed to increase."
However, he admitted that conditions for major projects, such as Lewisham, were "simply not favourable right now" and that ministers needed to enact "urgent reform" to revive construction.
