Southwark councillors have approved a development of 64 new homes at the corner of Old Kent Road and Glengall Road - and plans for another 85 homes next door have been submitted this week.
Family Mosaic wants to build 64 new homes on the former petrol station site at the corner of Old Kent Road and Glengall Road.
Part of the site is currently used as a forecourt for the adjacent used car showroom and part is occupied by the Auto Italia art gallery.
Southwark Council refused permission for the scheme, designed by Levitt Bernstein, in November 2009 and an appeal by Family Mosaic was dismissed last summer.
Although planning inspector Mel Middleton rejected Family Mosaic's appeal, the decision made clear that the height and bulk of the scheme were deemed to be acceptable.
Southwark's planning committee considered a revised application – taking into account the inspector's findings – on Tuesday night.
Recommending the scheme for approval, planning officer Yvonne Lewis acknowledged that "the design falls some way short of being exemplary".
The new development will include four social rented homes and 18 intermediate or shared ownership units.
The committee heard from Sven Arnstein, representing Glengall Road residents, who outlined their concerns about the design of the new building and its impact on the listed villas to the south.
Family Mosaic's agent told the committee that the building was "sensitively designed" and would fill a gap in the Old Kent Road. He said that work would start on site later this year.
Cllr Nick Stanton was particularly concerned about the safety of residents of the new development crossing Glengall Road to use Burgess Park, and the committee resolved to ask officers to seek a contribution from developers for measures to improve pedestrian safety.
"Unless you do something, kids will get killed there on day 1 and day 2," he warned.
Cllr Robin Crookshank Hilton was scathing about the design. "It looks like it's befitting of a Croydon civic centre," she said.
Ward councillor Darren Merrill told the committee that he welcomed Family Mosaic coming to East Walworth but he did not believe that the proposed building was of a high quality design.
"We should put our foot down and say we want high quality design in Southwark," he said.
The committee voted 3-2 in favour of the planning application with one abstention.
This week another housing association – London & Quadrant – has submitted an application to redevelop the adjacent former Alan Day Volkswagen showroom to include 85 new homes with retail at ground level.