A compulsory purchase order to make residents of a London council estate sell their flats ahead of a regeneration scheme has been blocked.
The government told Southwark Council it had not done enough to protect Aylesbury Estate residents.
Minister Sajid Javid found the orders breached the human rights of residents as they would not be able to afford to stay on the estate or live nearby.
Southwark Council said they would seek a judicial review.
It called on Mr Javid to reconsider his decision, claiming the report was based on a former leaseholder policy which had been updated in December 2015.
Council leader Peter John said the government had "jeopardised plans for 800 new homes for Londoners" and pointed out each of the remaining resident leaseholders has been offered a new home in the same area, rent-free, and with a shared equity arrangement to protect money they had saved and invested.
Homeowners on the estate told the BBC in recent weeks the council had priced their properties below market rates.
Resident Beverley Robinson, who bought her flat more than 10 years ago, claims the council valued her property at £117,000.
However, two independent valuers priced it at about £300,000.
"You can't buy a home in London for under £140,000 which means I will have to start again - finding a mortgage - and at my age that's not an option. I will be turned down by the banks," she said.
They would be forced to move away, with an impact on family life, the education of affected children and "dislocation from their cultural heritage" for some residents, the government said.
Agnes Kabuto, who lives on the same estate, said the council had offered her £145,000 for her three-bedroom home while similar-sized properties in the area were going for about £385,000.
The Aylesbury Estate in Elephant and Castle was the largest social housing estate in Europe, but it is to be demolished to make way for a £1.5bn regeneration scheme.