Lambeth Council is to spend £900,000 converting the former Coral Day Nursery in Wootton Street into a specialist school for children with autistic spectrum disorder.
The nursery building was repossessed by the council in September 2013 and has since been occupied by live-in guardians.
Now the council has decided to use the Wootton Street building as a temporary home for a new 45-pupil school for pupils with autistic spectrum disorder.
The school was due to open in Kennington in September this year but problems with the building meant the authority had to seek alternative accommodation for the first year.
The new centre is part of the Wyvern Federation, a collaboration between Wyvil Primary School and Centre for Children with Speech and Language Impairment and Vauxhall Primary School and Children's Centre.