Mayor of London Boris Johnson says that Elephant & Castle's prospective developers Lend Lease are in a "dire position" as a result of the credit crunch.
The Mayor was speaking at People's Question Time at the O2 Academy Brixton on Monday night.
The Mayor and a panel of London Assembly members faced questions from Southwark and Lambeth residents at the meeting which was chaired by Val Shawcross AM.
One Southwark resident asked the Mayor what he was doing to assist the much-delayed regeneration of Elephant & Castle.
"It's a fantastic project and we'll do everything we can to help it go ahead," said the Mayor.
"The trouble is we've got a credit crunch and the developers – Lend Lease I think it is – are simply in a dire position.
"So the [section] 106 money that's normally available is not going to be available to do the fantastic things.
"I know that we're actively trying to broker a deal between Southwark Council and Lend Lease. We want to get it done, and if we possibly can, we will."
The council and the Australian developer signed a new exclusivity agreement this summer. It is believed that the agreement expires at the end of this month.
Last month Lend Lease boss Dan Labbad confirmed that his company remained "very interested" in the Elephant & Castle project which includes the redevelopment of the Heygate Estate and the Elephant & Castle Shopping Centre site.
Last week Cllr Paul Noblet, the council's executive member for regeneration, said that demolition of the Heygate Estate was due to begin early in the new year. Redevelopment of the site is expected to take up to 12 years.
• Listen to People's Question Time in full on the LBC Radio website