The office of London mayor Ken Livingstone said this week that the 50% affordable housing rule would not be enforced on the redevelopment of the Millennium Dome site.
A GLA spokesperson said about the £4bn plan, which includes 5000 new homes: "On individual schemes such as this, we work with the developer to get as many affordable homes as possible."

The statement came days after the government ended a year of uncertainty over the site by giving away the dome and surrounding site to Meridian Delta, a Lend Lease-led consortium, for redevelopment as a sports stadium surrounded by housing.

David Hutton, spokesperson for Meridian Delta, said the scheme has the potential make the largest single contribution to tackling Livingstone's housing targets for the capital.

Tony Carey, managing director of housebuilder St George, welcomed the deal. He said: "I find it pleasing that people are thinking about large residential schemes on brownfield sites, because that is the future of London."

Architectural watchdog CABE called for affordable housing to be an integral part of the scheme. It said it wanted assurances that the scheme would not be "just another could-be-anywhere leisure park".

CABE chief executive Jon Rouse said: "We must seize the opportunity to create an urban district that will be acknowledged worldwide as an example of best practice."

Lord Falconer, minister of state for planning, said he was organising a joint venture with Meridian Delta to redevelop the 76 ha site. Architect Terry Farrell & Partners has drawn up a masterplan that envisages investment of £4bn over the next 20 years.

The deal, which is not expected to be signed until May, will involve Meridian Delta taking a 999-year lease on the dome. It will then invest £200m to turn it into a 20,000-seat stadium hosting live entertainment and sporting events, to be open by Christmas 2004.

Falconer said the government would receive a share of any profit through English Partnerships.

He added that the latest deal provided better value than those previously proposed by Legacy and Nomura. He said Meridian Delta would bear the financial risk of the deal, with the government's side of the bargain being restricted to the provision of land. However, he conceded: "This is not a done deal. There is still some hard negotiating to do."

A spokesperson for the DTLR said that the worst-case scenario for the government is that it will make only a few hundred million from the exchange. Meridian Delta estimates £500m will go to the public purse.

The move appears to quash rumours that EP will be wound down after its current review. A DTLR source hinted that the body will still be around in May to enter the joint venture agreement.

Meridian Delta includes developers Lend Lease, Quintain Estates and US leisure group Anschwitz.