A long running dispute between Berkeley Homes and Southwark council is to be the subject of a surprise intervention by Ken Livingstone, the mayor of London.

The mayor told an audience at the launch of his draft housing strategy that he was considering imposing a compulsory purchase order on the Potters Field site next to his City Hall headquarters.

This is where Berkeley wants to build an Ian Ritchie Architects scheme, in which 386 flats are contained in eight mini-towers. In 2003, Southwark, under pressure from local residents, refused to give permission to it.

This led to a public inquiry, which resulted in the scheme receiving planning consent.

However it could not go ahead as the council owned a large share of the site, which it is refusing to sell.

Livingstone said: “It’d be the first time that I would have used a CPO on a council, but we can’t have land sitting there when one of London's best developers has come up with a scheme like this.”

Nick Stanton, leader of Southwark council, said: “This is the last significant site in central London, and we strongly believe it deserves a major cultural use. The council is continuing to work with Berkeley Homes, and we’re surprised to hear these comments from Mr Livingstone.”