Southwark's cabinet is expected to approve the sale of an empty patch of land on the Old Kent Road for use as a new mosque to be developed by the Muslim Association of Nigeria.
The existing Old Kent Road Mosque opened in the former Duke of Kent pub at the corner of Rowcross Street in 1999 but the Muslim Association of Nigeria soon outgrew the building and has been raising funds for several years towards the development of a purpose-built home.
Southwark Council and Esso will share the proceeds from the sale of the site, which is subject to planning permission being granted for the new mosque.
"The site is currently overgrown and an eyesore," says Cllr Richard Livingstone, the council's cabinet member for resources.
"The sale of this land will generate a significant capital receipt for the authority. It would also allow the Muslim Association of Nigeria to move from their current premises that creates some significant pressure on car parking on the neighbouring housing estate."
Last year the Muslim Association of Nigeria was honoured at the Southwark Civic Awards for its inter-faith, education and community work.