An 86-year-old man with terminal cancer was threatened with eviction after executing his right to buy his home.
Peter Woods, of Langdon Road, Morden, a council tenant for 20 years, claimed his right to buy from housing association Circle Housing Merton Priory (CHMP) on November 14.
But on March 17, more than a week after his claim should have been processed, he received a letter from CHMP telling him to evacuate the property because he was no longer living there.
Mr Woods, who wants to live at home, has been staying at his son's house in Norwich because he needs to rennovate the Morden property to make it livable for someone with his condition.
Despite receiving a letter from Mr Woods' doctor attesting his illness, CHMP insisted he was not an eligible tenant because the Department for Work and Pensions had incorrectly entered his correspondence address as a change of address.
The error, which left him £1,000 in debt after his housing benefit was clawed back, was noticed on Monday and the eviction notice has been withdrawn.
Kevin Woods, Mr Woods' son, said: "It's been three months of stress. We didn't know what was going on. No-one was telling us what was happening."
Mr Woods is still waiting for the housing association to approve his request to buy his home.
Wayne Hainsworth, managing director at CHMP, said: "We apologise for the misunderstanding around the location of Mr Woods' permanent home. We are now working with him so that his right to buy can continue."
A spokeswoman for DWP said: "We apologise for any mistake that we made and we are doing everything we can to rectify it."