Residents locked in a legal battle with a train company over a “hideous” rail depot built behind their homes have celebrated a major breakthrough in the fight to get it removed.

Southern Railway has agreed at the 11th hour with Lambeth Council to adjourn a planning inquiry into whether the depot near Streatham Hill station was lawfully built.

The decision has been considered an admission by Southern it could lose the dispute.

A loss would set a precedent of national significance affecting similar disputes with rail providers up and down the country, as well as future rail expansion.

Southern will now negotiate with the council, that has a £1m war chest to fight the residents' cause, as to whether or not it can take down parts of the enormous structure used to clean and house trains.

Gill Wright, who has fronted the battle against the structure for the hundreds of affected residents in Sternhold Avenue, said she was delighted with the development.

She said it was an admission the depot - built without planning permission - was not a permitted development of benefit to the national railway.

She said: "We have felt it has been proved throughout this inquiry the way this structure was built was not legal. Now lets hope we get the result we want around the negotiation table."

A string of demands by Lambeth Council, including reducing noise and taking down the depot's lights - described by residents as “floodlit strength” - were mostly rejected by Southern during the inquiry.

If a deal is struck, Southern would make a revised planning application for a changed depot.

Both parties are due in front of planning Inspector Anthony Fussey on May 27 to report on their progress.

If no compromise is made, the inquiry would resume in September.

Director of legal and democratic services, Mark Hynes, said: “Although we are attempting to resolve this outside of the inquiry, we are still standing shoulder to shoulder with the residents.

"We will take the necessary measures to enable locals to once again, enjoy a decent quality of life.”