Mayor of London Boris Johnson has postponed his final decision on the controversial planning application for the Eileen House site at Elephant & Castle until 19 December.

Oakmayne's proposed 41-storey tower on Newington Causeway is at the centre of a dispute with the Ministry of Sound nightclub which fears its licence will be jeopardised by complaints from occupants of the new homes.

Mr Johnson – who decided in December 2011 to 'take over' the planning application himself – presided over a three-hour representation hearing at City Hall on Tuesday afternoon.

"It is absurd that it has taken the best part of five years for this process to produce so little," said the Mayor.

"It strikes me as being essentially a dispute about neighbours which has not benefitted from the spirit of cooperation I would like to see."

Greater London Authority planning officer Alexandra Reitman said that the closure of the Ministry of Sound due to noise complaints from incoming residents is "not likely to occur in our view".

However, the nightclub's chief executive Lohan Presencer said that to suggest that the development did not pose a major threat to the business was "mad, bad and plain wrong".

The club is urging the Mayor to compel residents of the new tower to sign an agreement that they will not make complaints about noise from revellers and music.

However, developer Oakmayne – represented at the meeting by Chris Shaw – warned that the the measures proposed by the club would make their development "unfundable" and the homes within it "unmortgagable".

Mr Shaw said that a contract for the demolition of Eileen House had already been signed and that the developers were fully committed to building the scheme if the Mayor gave the green light.

Although Southwark Council's planning committee had rejected the planning application two years ago, this week's hearing was addressed by council leader Peter John who endorsed the City Hall planning officers' recommendation that the Mayor should approve the scheme.

Mr Johnson – who complained that he was being asked to make a "completely false" choice between approving a new development and protecting a nightclub – said he hoped that the one month adjournment would "allow a fuller negotiation to take place between the Ministry of Sound and the developers".

The Mayor told the parties: "I look forward to you getting your heads together and sorting this out and to hearing what progress you can make."

Speaking afterwards, Cllr Peter John said: "We urge both parties to follow the Mayor's request and negotiate a solution as quickly as possible."

Earlier the Mayor had also heard representations from Elephant & Castle resident Jacqueline Rokotnitz who said that she spoke on behalf of local people and urged Mr Johnson to approve the scheme.

Read our tweets to find out how the session unfolded: