Nick Stanton, Riverside ward councillor and leader of Southwark Council, has been awarded the OBE in the New Year honours list.
Since 2002 he has served as council leader, initially in a minority Lib Dem administration and since 2006 in an alliance with the Conservatives.
Earlier this month the Audit Commission released a report which concluded that the authority is "performing well".
"Nick and his colleagues have transformed Southwark in the six and a half years since he became the leader," says Simon Hughes MP. "In spite of the restraints on public expenditure I have no doubt that this improvement and transformation will continue."
Cllr Stanton's honour is for "services to local government".
Also honoured in this year's list is Sophi Tranchell, managing director of the Gainsford Street-based fair trade chocolate firm Divine, who receives the MBE "for services to the food industry". The company recently celebrated its tenth anniversary with an exhibition at Oxo Tower Wharf.
Local resident Maxine Benson, co-founder of Waterloo-based everywoman which provides training, resources and support services for women in business, receives the MBE "for services to women's enterprise".