The pioneering plan will see hundreds and possibly thousands of council houses in west London, demolished and replaced with cheaper private homes for sale over the next 15 years.

The council and Stanhope will jointly take forward housing developments, beginning with building more than 300 homes on two council-owned sites.

Two council-owned vacant residential sites in Fulham at Watermeadow Court Estate and Edith Summerskill House will see 40% sold at a discounted price to help local people take their first steps onto the housing ladder.

One third of the discounted market sale housing would be reserved for families on incomes of up to £30,000pa, one third would be affordable to those with incomes of up to £40,000pa and the remainder would be affordable to those with incomes up to the Mayor of London’s official affordable housing limit of £80,000.

The borough’s cabinet member for housing, Cllr Andrew Johnson, said: “As well as delivering more than 100 low-cost-homes to buy, this partnership will also enable the council to ensure that the proceeds are ploughed back into similar schemes, estate improvements and reducing our £200m of housing debt.”

Critics of the joint venture disagree with the approach, saying that social housing should not be replaced by homes for market sale.

The council argued that the partnership with Stanhope will enable affordable house building on a scale that would not otherwise be possible.

A spokesman for the council said that the vast majority of existing social housing tenants will not be affected.

“However, where future opportunities to build new homes occur, the council is committed to ensuring that there is no net loss of existing social housing provision and that current secure council tenants will remain secure council tenants.”

He added that the council is working hard to secure more affordable homes so local people can fulfill their housing aspirations without leaving the borough.

More than 30 other councils have shown an interest in replicating the arrangement, according to Hammersmith & Fulham.