The Elephant & Castle regeneration agreement between Southwark Council and Lend Lease was signed on Friday at the council's Tooley Street offices.
Southwark's cabinet had voted on Monday 7 July to approve the deal with Australian developers Lend Lease, but the decision was 'called in' for scrutiny by opposition Lib Dem councillors who feared that the agreement was poor value for money.
Critics of the deal say that Southwark's incoming Labour regime has squandered £26 million by choosing to set a guaranteed level of affordable housing in exchange for diminished cash returns from the sale of the Heygate Estate land.
Speaking on Friday, council leader Peter John said: "Today is an historic moment for the future of Elephant & Castle. This signing paves the way to a transformation of this part of Southwark over the next 15 years, creating a new and exciting destination for London.
"I'm delighted to be working with our partner, Lend Lease, to develop an area with so much potential, to the benefit of local people and for all Londoners."
Lend Lease's Dan Labbad said: "Lend Lease is delighted to be delivering the regeneration of Elephant & Castle. For us this is one of the major regeneration projects not just in the UK but around the world.
"It is not just about bricks and mortar. We are using property as a catalyst for a wholesale regeneration of the area. I have confidence in the partnership and I am looking forward to getting started on this project."
Lend Lease will now be able to start work on the outline planning application for the Heygate site, but it's likely to be a long haul – outline planning consent is not expected until late 2013.
The fate of the Elephant & Castle Shopping Centre remains uncertain as discussions between its owner St Modwen and Lend Lease continue.
Under the terms of the regeneration agreement Lend Lease will underwrite the council's costs if it seeks a compulsory purchase order to enable the shopping centre to be redeveloped.