A political spat has broken out between Boris Johnson’s housing advisor and Sutton Council’s Liberal Democrat leaders.

Richard Blakeway wrote to Sutton Housing Partnership to say Mr Johnson's plan to rescue £122m of withdrawn Government funding could not proceed because Sutton Council had lodged a judicial review.

The council announced last month that it would take legal action against the Government after it withdrew funding for its Decent Homes programmes for 2009-10 and 2010-11.

In the letter Mr Blakeway said the council’s appeal had “overtaken” Mr Johnson’s plans to negotiate with the Homes and Communities Agency, because talks now had to be suspended while the legal review took place.

Sutton Conservative Councillor Barry Russell said the Lib Dems had left the “Mayor’s hands tied.”

But Lib Dem council leaders said claims the Conservative Mayor was able to help were “wishful thinking”.

Councillor Colin Stears, Lib Dem executive member for housing, said: “I am astonished that Boris Johnson and local Conservative councillors continue to peddle the myth that the Mayor of London has the power to divert money from the Homes and Community Agency to Sutton’s tenants.

“The Mayor cannot make the HCA hand over money and our Judicial Review has not changed that fact.

“While local Conservatives chase the Mayor’s rainbows, Sutton Council is taking real steps to fight for our residents’ right to Decent Homes money, together with the Conservative boroughs of Havering and Redbridge.”

The money withdrawn by the Government would have paid for replacement of antiquated box bathrooms on the St Helier estate, increased energy efficiency with the installation of new double glazed windows, and insulation and upgrading tower blocks such as Chaucer House.