Labour politicians have accused their local Town Hall administration with London’s worst housing shortage of “misleading” families on the waiting list.

They have written an open letter today to the Mayor of Tower Hamlets, in London’s deprived East End, over a decision made behind closed doors last month to scrap 149 new council homes.

It follows a finance report showing the scheme in Watts Grove, Bromley-by-Bow, to be “unaffordable”.

Independent Mayor Lutfur Rahman wrote in the East London Advertiser that “it has not been scrapped.” The scheme, would be going ahead “just as soon as we have ensured the most cost effective way of doing so.”

But Labour’s candidate challenging him at next April’s local elections, London Assembly budget chairman John Biggs, insists it has been abandoned.

He joined the Opposition Labour Group leader on the council, Sirajul Islam, in an open letter declaring: “Your decision was clear and unambiguous, that you were not awarding a contract for Watts Grove and that you are actively reconsidering the decision to classify the site as surplus to requirements.

“Both clearly show you had no plans to build on the site when you scrapped the contract.”

The letter, urging the mayor to go ahead with the scheme, was concerned about “contradictory statements in public and private” misleading families and creating confusion.

Biggs, who represents east London at City Hall, said today: “Housing is an incredibly important issue to thousands on the waiting list. The Mayor cannot say one thing in public and another in private.”

Tower Hamlets has one of the longest waiting lists in the country, with more than 20,000 families in the queue to be housed.