Lewisham Mayor Damien Egan has said using a planning regulation to save the Bell Green gas holders from demolition would be "irresponsible".
This comes after Cllr Alan Hall questioned why the council would not implement an Article 4 direction, after it was requested by the Sydenham Society.
An Article 4 direction is a planning regulation local authorities can use to remove permitted development rights on a site.
But using the regulation could see the council paying "significant compensation" to developers and would put the council at "considerable financial risk", Mr Egan said.
Addressing the Mayor at a full council meeting, Cllr Hall said: "The Sydenham Society have requested an Article 4 direction on Bell Green gas works some time ago.
"These were locally listed by the Mayor and cabinet at the time.
"This was refused because it was too difficult," he said.
"Does the Mayor agree with the then-Tory planning minister Nick Boles MP, who has been in the news recently, that Article 4 directions can be introduced with immediate effect?"
But Mr Egan said the application for the Article 4 notice was rejected because the council could risk paying compensation because the council had not held a consultation period.
"It wasn't rejected for being too difficult. An Article 4 notice...you don't have to give a one-year consultation period but if you don't it is subject to paying significant compensation to developers which would put the council at considerable financial risk," he said.
"It would be irresponsible to do," he said.
The gas holders, which were built in the late 1800s, and tower at 38 metres high and 54 metres in diameter, haven’t been used since the 1990s and were formally decommissioned in 2012 following changes in the way gas is stored.
Southern Gas Networks (SGN) said the Bell Green site is no longer sustainable and serves no use after being tasked to dismantle its gas holder network by 2029.
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