Developer U+I and the London Fire Brigade submitted plans to transform the grade II listed now-vacant building at 8 Albert Embankment on London’s South Bank.
As well as 443 homes, 162 of which will be earmarked for social housing, the plans proposed providing a new permanent base for the London Fire Brigade Museum and creating a new fire station for the south London borough of Lambeth.
The museum and fire station will be housed in the more than 24,000 square metres of floorspace dedicated in the scheme for non-residential uses, which will also incorporate a hotel, workspace, shops, a gym and a restaurant.
The scheme, designed by architects Pilbrow & Partners, includes two tall buildings, reaching up to 24 and 26 storeys high, which local critics have claimed will spoil views of the River Thames.
The plans were approved by the London Borough of Lambeth's planning committee in December, in line with a recommendation by officers.
However, a letter this week from Richard Watson, head of the planning casework unit at the Ministry of Housing, Communities and Local Government, says the project will now be called in by the secretary of state Robert Jenrick.
It said the public inquiry will focus on how the proposed development aligns with policies in the National Planning Policy Framework on delivering a sufficient supply of homes and the conservation and enhancement the historic environment.
When the application was considered by Lambeth Council, officers advised at the time that the proposal departs from a local planning policy stating the site is "inappropriate for tall building development" due to its heritage sensitivity.
But they found the impact of the height and massing of the development was "satisfactory", including on local heritage assets.
They also said a viability test showed that the 40 per cent affordable housing contribution offered by the developers, was maximum reasonable proportion the scheme can currently provide.
In response to the secretary of state’s decision, a U+I spokeswoman expressed disappointment.
“The decision means that the delivery of a new fire station for the London Fire Brigade, a new permanent home for the London Fire Brigade Museum, along with 443 much-needed homes, 40 per cent of which will be affordable, as well as 100,000 square feet of workspace and new public spaces could now be significantly delayed.
“The plans, which received the backing of the London Borough of Lambeth and followed extensive consultation with the local community, will positively transform a site that has lain vacant for almost ten years.”
Michael Ball of the Lambeth Village local campaign group said: "It is criminal that these central London sites have been left mostly vacant for 20 years in public ownership, yet all successive mayors can do is back schemes helicoptered in and completely out-of-scale or context, and of little use to London or Londoners, in order to try and make big bucks like the most rapacious of developers.
"Real people living in real social housing will lose up to 40 per cent of their daylight."