London mayor Ken Livingstone has threatened to refuse planning permission for the £440m regeneration of two south London council estates because the proposal would cut the amount of social housing there.

The scheme, called project Vauxhall, involves the redevelopment of the Ethelred Estate and the smaller China Walk Estate in the borough of Lambeth. It will reduce provision of social housing by almost half.

In a letter to the Save Ethelred Homes group, which is against the scheme, Livingstone said: “Affordable homes are being lost through Right to Buy and demolitions of housing estates, such as that proposed at Ethelred.

“I will be challenging developers of major sites, such as project Vauxhall, to respond and propose schemes with fewer luxury houses and more affordable, low-cost housing.

“This proposal is above the threshold for applications to be submitted to me and if I am not satisfied with the development proposal I am able to direct the borough to refuse the planning application.”

Joint-venture developer St George declined to comment but an insider said: “The mayor has very extensive powers over a scheme of this size. It’s something we will have to look at.”

A spokesperson for Lambeth council, which is in favour of the development, said: “If tenants vote against the scheme, then it is dead in the water. If they vote in favour, then the mayor would have to tread carefully and I’m sure he wouldn’t interfere.”

The regeneration envisages more than 2000 private homes and 600 low-cost dwellings. Residents are voting now on whether to accept the proposals. The outcome is expected to be announced in mid-September.