A tower of at least 30 storeys will be built alongside the Metropolitan Tabernacle to fund a new leisure centre at Elephant & Castle, according to a new council report.
If the project proceeds on time, the new centre could be completed by spring 2014. The council proposes to use 4 Futures, the local education partnership 80 per cent owned by Balfour Beatty, to carry out the development and avoid the need for a EU-compliant procurement procedure.
The council has always said that it planned to sell the front part of the site for residential development to help fund a new leisure centre.
The report reveals that the council's cabinet will this month be asked to approve the sale of part of the existing leisure centre site to Lend Lease, the borough's Elephant & Castle development partner.
This will give Lend Lease its first local land holding outside the Heygate Estate footprint.
The documents published this week reveal that the likely development will take the form of a "30-storey plus residential tower" which will sit in front of the new leisure centre.
"Officers have looked, with the sport's governing body, at a number of ways in which squash courts could have been accommodated in the new centre," says Gill Davies, the council's environment director.
"Unfortunately, this would have been possible without the considerable diminution of other provision within the centre or loss of public space and building land outside the centre.
"Neither of these outcomes is desirable. The centre currently has no pool and the facilities are of poor quality but of over 100,000 sports-related visits to the centre in recent years under 10 per cent of these were to play squash.
"Although the loss of the squash courts is regretted it must be balanced against the huge benefits that all the other modern and high quality facilities in the new leisure centre will bring to local residents and visitors.
"In addition to the sports hall; gym and space for dance and exercise the new pools will bring back an amenity which has been missing from the area for almost fifteen years."
One obstacle that could hold up the scheme is the likely presence of human remains underneath the development site. Part of the leisure centre was built on land that was formerly included in the churchyard of St Mary Newington. Trial excavations, with the permission of the Diocese of Southwark, are due to be carried out this summer.
• This article was amended on 14 June to clarify that no architect has yet been appointed for the residential scheme. We previously said that Make architects had been engaged to carry out design development.