Some £4.5m of unpaid building work has had to be written off by Lambeth Council because of a cock-up that saw bills to leaseholders sent out late.

Some 3,500 owners of former Lambeth Council properties were sent the bills in 2009 for work carried out between 2000 and 2007.

The unpaid bills covered improvement works like window and roof replacements and were up to £30,000 for each leaseholder.

But Lambeth Living, Lambeth Council's controversial housing manager, has been unable to enforce collecting the debt because of the council's failure to bill people within 18 months of the work taking place.

As a result Lambeth Living has only been able to collect £1.1m of some £5.5m outstanding from the works, since the problem was uncovered, as the leaseholders are not legally obliged to pay.

The cock-up is understood to have occurred because of a failure to pass information across different areas of the housing department.

The scandal is referred to as Project 500 by Lambeth Council as it refers to errors with the billing of some 500 major works contracts.

Councillor Jeremy Clyne, Liberal Democrat housing spokesman, said he tried to bring those responsible to account, but was blocked by Labour.

But the Labour-run council's cabinet member for housing, Councillor Lib Peck, pointed out the failures to send out the bills also occurred while the Lib Dems were in charge from 2002 to 2006.

The £4.5m debt write off is the latest blow to Lambeth Living's attempts to improve housing in the borough to unlock £250m of decent homes funding. It recently put a freeze on all non-emergency repairs in a bid to balance its books.