The Potters Fields saga took a dramatic turn on Friday when English Heritage threatened a legal challenge against the planning inspector's report.
In turn, English Heritage said that it regarded Reid's language and tone as "inappropriate".
In a statement, a spokesman for English Heritage said: "In normal circumstances we would accept the decision of the deputy prime minister, satisfied that although we might not be happy with the outcome, all the relevant material factors had been taken into account.
"However, having now read the inspector's report, we have some serious concerns at the presentation of the case he makes and are astonished that he should have denied the locus of English Heritage in key aspects. We are therefore actively considering a legal challenge.
"In actively down-playing the relevance of English Heritage's evidence, we fear he may have misled the deputy prime minister in the weight to be given to the impact of the proposed development on the historic environment."
English Heritage's statement comes a day after Southwark Council and Berkeley Homes pledged to work together to develop a way forward for the stalled development of the site.