The Secretary of State for Housing, Communities and Local Government has accepted that his decision to refuse planning permission for a scheme on a Baptist Church site in Purley including a 17-storey tower block should be quashed.
A judicial review hearing, set for 10-11 April, will no longer take place.
The minister is reported to have conceded that he failed to give adequate reasons when refusing planning permission.
The planning application will be referred back to the Secretary of State for reconsideration.
The legal action was brought by developer Thornsett Group, which is looking to build 220 homes, including 39 affordable homes, along with a new home for Purley Baptist Church with community facilities including a sports hall and community and exhibition spaces.
The London Borough of Croydon, which in December 2016 had granted permission for the Mosaic Place scheme, was an interested party.
Thornsett Group and the council both submitted written legal arguments to the High Court earlier this year, highlighting a lack of explanation and justification regarding the Secretary of State’s decision.
Croydon said: “The principle of a tower on the site was properly considered as part of the Croydon Local Plan and planning application process, and an Independent Design Review had supported such an approach. Although the proposed 17-storey tower was one storey higher than the Local Plan, there was no reason to refuse.”
Cllr Paul Scott, cabinet member for environment, transport and regeneration at Croydon, said: “It’s pleasing the Secretary of State has accepted errors were made in justifying his refusal of planning permission for this important brownfield development, which was fully endorsed, not only by the council’s planning committee, but also the Mayor of London.
“The proposed development was also supported by the Secretary of State’s planning inspector – and it would provide much-needed homes in the borough, with a replacement church and community facilities while incorporating the highest standards of architecture and materials.”
Cllr Scott added: “Earlier this year at the Building London Summit, the Secretary of State was praising Croydon for going the extra mile to build more homes.
“All planning applications we receive are subject to a stringent planning process – and this development was deemed to be both sustainable and appropriate on a site allocated in the Croydon Local Plan.
“Development on the site remains long overdue and I hope the Secretary of State fully recognises the full regenerative potential of these proposals.”