Housing blocks with space for dozens of homes yards from Buckingham Palace have been left empty for seven years by one of Britain’s biggest property developers, triggering calls for the council to take immediate action to bring them back into use.

The buildings in Victoria, central London, are boarded up, having been bought by Land Securities in 2010 as part of a now stalled scheme to create 200 luxury apartments in a nearby office building.

The tenement blocks were due to be refurbished to create 63 affordable homes as part of a planning deal to allow the Portland House office project to go ahead. However, Land Securities shelved the scheme as demand for multimillion-pound apartments declined.

Paul Dimoldenberg, the planning spokesman for the Labour opposition on Westminster council, said: “This is an embarrassment. We have a national housing shortage and these perfectly good homes that could have provided accommodation for people in need are boarded up.

“The council should take immediate action to insist the owners bring forward plans for these empty homes without further delay. These homes have been empty for years and there can be no excuse for further delays.”

The vacant blocks on Castle Lane and Palace Street were originally built in 1882 as workers’ accommodation for the Stag Brewery and were used as a homeless hostel until they were bought by Land Securities.

Homelessness and rough sleeping are rising in London. There were 54,280 people living in temporary accommodation in the capital in the first quarter of this year, an increase of 15,000 since the start of 2010. Westminster has the highest number of rough sleepers of any London borough, with 260 cases in January, according to government data.

Westminster’s planning director, John Walker, told councillors concerned about the vacant homes that “the planning consent to upgrade and convert the buildings into new affordable housing was linked to converting Portland House into private residential, but as the market has changed, Land Securities have said they no longer intend to implement the scheme”.

A spokeswoman for Land Securities confirmed the main blocks have stood empty since 2010, but said space in a mews building was used between 2014 and 2016 by 16 long-term rough sleepers helped by Passage, a local homelessness charity.

She said the company “is now actively working on proposals to develop Castle Lane independently of Portland House, and will be meeting with Westminster city council for early discussions on its proposals in the autumn”.

It is understood the company may be considering extending the buildings and developing both affordable housing and housing for private sale on the site, although no timescales have been set.

The Labour group at Westminster claims the council’s Conservative leadership has been “negligent in allowing these homes to remain empty for so long, when the homes could have provided temporary accommodation for families who have been living in unsatisfactory bed-and-breakfast accommodation”.

Daniel Astaire, Westminster’s cabinet member for planning and the public realm, said: “We are encouraging Land Securities to come up with an alternative proposal for use of the properties.

“We will be meeting with them soon to discuss this. The council is committed to delivering 1,850 new affordable homes in Westminster by 2023.”

Last year, there were just over 200,000 residential properties in England left empty for at least six months. Powers to bring them back into use remain limited and those that are available are little used.

In the neighbouring Royal Borough of Kensington and Chelsea, 159 flats in the Sutton Estate, built in 1913 by a philanthropist to house poor people, have stood empty awaiting demolition as part of the landlord’s plan to replace much of the site with luxury housing.