A pre-application recommendation to redevelop Kilburn Square has been given the go-ahead by cabinet members despite objections.
Brent Council proposes to demolish the former Kilburn Square Clinic and 13-15 Brondesbury Road to provide 139 flats in four separate buildings rising between five to eight storeys.
Objectors say the plans will remove the "green lungs" of the area as green space will be used for two of the blocks.
They say with 60 per cent more homes in the small area, the "high density" project will "aggravate the amenity space shortfall".
In its report Brent said: "Rising inflation, a continued shortage of labour and materials and events such as the Covid-19 pandemic and the war in Ukraine have had an adverse effect on costs and therefore the financial viability of each [housing] scheme."
The council did not resond when by this paper whether the Kilburn scheme remains viable.
Keith Anderson, chair of the Kilburn Village Residents' Association, said: "Brent’s justification is the huge waiting list.
"Block A is for assisted care which doesn't address the waiting list, block B will become shared ownership, with serious pitfalls, and C and E stretch definitions of affordability.
"The council haven't listened. They addressed only the height of one block of the blocks, not the loss of green space and trees or 60% more housing than in 2019."
The council said there are currently 24,000 people on its waiting list and 1,700 families in temporary accommodation but did not comment on the number of social-rented homes.
"Every home we develop is an opportunity for a family to have the security of a permanent home that meets their needs," said Cllr Promise Knight, Brent's lead member for housing.
"These proposals have been brought forward in response to the chronic shortage of genuinely affordable housing and issues of overcrowding in Brent.
"Whilst building council homes is a priority for us, so is ensuring that any new council development also benefits people who already live in the area.
"These proposals focus on improving the quality and usability of the open space on the estate."
She said people were properly consulted through workshops, drop-ins, surveys, exhibitions and resident panel meetings.
"We are committed to developing a scheme that works for as many people as possible and have already changed the proposals several times based on resident feedback," she said.
"When the proposals go through the planning process, there will be further opportunities for local people to have their say."
Planning permission will need to be granted for the development to go ahead.
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