Four families will be evicted, at a cost of £88,000 to Merton taxpayers, after blundering council officers failed to make “a call from one department to another” and check if newly-built flats had planning permission.

Rooms above the former Prince of Wales pub in Western Road, occupied by tenants on housing benefit, were found to be unlawfully small and inappropriate in an industrial area, at a planning meeting on Thursday evening.

Bungling officers at the authority had given the green light to funding the construction of four flats, added to its housing list, without checking if the work was lawful.

Merton Council’s cabinet member for finance, Councillor Mark Allison, was left furious by the gaffe as the retrospective application was thrown out by councillors.

He said: "I’m sorry the council has managed to make such a mess of this situation over the past year or two.

"A considerable amount of money has been wasted when all it would have taken is a phone call from one department to another to establish the developers weren’t authorised to carry out the work.

"The important thing is hard lessons are learned from this so it doesn’t happen again."

No disciplinary action is being taken against individual officers but the council had already conducted a review and made changes to its grant application procedure.

Lawyers have also been instructed to try to recover some of the costs.

Merton Council was unable to confirm the full cost to the taxpayer – the £88k came from a London Development Agency grant – but some at last week’s meeting believe the cost of rehoming the present tenants could see the bill top £100,000.

Chairman of Lavender Fields Residents’ Association, Neil Malcolm, who made representations against the application last week, said: “It’s utterly appalling so much taxpayers’ money has been squandered.

“It’s not just the £88,000 but all the extra grants that have to be given to the poor tenants.”

Colliersbridge Properties, owner of the former Prince of Wales pub now converted to a Mexican restaurant, was unavailable for comment.

Developers initially attempted to rip the pub down and build industrial units on the site after a fire in 2007, but residents and councillors successfully campaigned for it to be kept as a pub or restaurant for the community.