Four London councils are seeking a judicial review of the decision by Mayor Boris Johnson to permit 'affordable' rents to be set at up to 80% of market value, reports the BBC.
The four councils, Southwark, Islington, Tower Hamlets and Camden, say pricing affordable housing at the new rates will make it unaffordable to many in the boroughs.
The new rates were set out in the 'London Plan', which was approved by the London Assembly on Wednesday, despite the fact that a majority opposed the proposals.
Under Assembly rules, a majority of more than two-thirds is necessary to defeat a proposal.
The 'London Plan' is the development blueprint for the capital, taking the city through to 2031. All of the individual boroughs must ensure their local programmes are consistent with the master plan.
Currently, Southwark council says affordable rents are set at 40% of market value.
Under the proposals new properties would be capable of being rented at 80% market value, whilst older properties would be allowed to be rented for less.
The Mayor's office envisages average affordable rent rates to be around 65% of market value after the plan is implemented.
Councillor Fiona Colley of Southwark told the BBC: "Maybe there are some areas of London where rent levels of 80% of market rent are affordable to most people, but they certainly aren't in Southwark."
"The implication of the mayor's decision is that councils will have little power to make sure new affordable housing is really, genuinely affordable for local people," she added, saying that the council was taking legal advice on a judicial review of the Mayor's proposals.