The London Assembly Transport Committee has backed proposals to route the Brixton arm of the Cross River Tram via Baylis Road and Kennington Road rather than Elephant & Castle.
The Transport Committee approved its response to Transport for London's consultation on the proposed Cross River Tram at City Hall on Wednesday.
TfL launched a renewed round of consultation on the Camden Town to Brixton and Peckham tram link at the end of last year.
One of the questions asked related to the route of the Brixton arm. Option 1 saw the Brixton and Peckham branches dividing at the Elephant and Castle. Option 2 would place the tram junction outside the Old Vic theatre, with Brixton-bound trams running down Baylis Road to Kennington Road and Peckham trams continuing down Waterloo Road towards the Elephant.
Chairman Geoff Pope (Lib Dem) told the meeting: "Option 2 is preferable on balance from the evidence we have today."
"This would increase tourist and visitor numbers, boosting the local economy. This route would also serve St Thomas' Hospital, providing easier access for patients and visitors.
"The committee would note that Option 1 serves the Elephant and Castle, which is already served by the Waterloo to Peckham route."
The committee response was agreed by a majority. Conservative Members did not support the submission.
The association's response adds: "In general, trams are probably a good idea, but not at any cost, and the balance of costs and benefits is quite different for the two southern branches of CRT.
"The Peckham branch runs to and through areas that are beyond the Undergound network and badly in need of big, new public transport schemes. The Brixton branch, which will run through Kennington, runs through areas well-covered by the Northern and Victoria lines."
It also calls on TfL "to start communicating now, with candour and in detail, to explain to local residents how the environment in Kennington, particularly the trees, will be preserved".