Wandsworth is in line to be one of three councils - and the only one in London - that will act as test cases for a radical overhaul of the current housing finance system.
A private members bill is due to go to the House of Commons on December 8 calling for Wandsworth, Cornwall and Stockport councils to be freed from the Housing Revenue Account subsidy system.
The current system means the council must hand the Government some of the money it receives in rents together with most of the income from right to buy sales to existing tenants.
The proposed change will see Wandsworth given more control over the spending of such revenue at a local level - enabling council officers to use the cash to improve housing services.
The council's housing spokesman Councillor Guy Senior said: “We are gratified that Wandsworth has been chosen as one of three authorities to lead the way on this. By being in at the start we can help set the agenda for the rest of the country.
“We have been arguing for years that this patently unfair system penalises efficient councils and stops us from reacting to local issues and concerns. Now we can spend the income from our housing stock on improving homes for local people, including possibly further developing our innovative Hidden Homes scheme."
“These changes will also be a key part of our new Wandsworth Challenge programme of service provision, based on local decision making and engagement with the whole community to meet local needs.”
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