THE government has said the council acted "unusually and unreasonably" in its handling of plans to turn Walthamstow Stadium into a housing estate.
It comes amid mounting calls for the authority to be investigated over how it fast-tracked the planning application to build 294 homes at the iconic site in Chingford Road, Chingford.
Conservative London Mayor Boris Johnson rubbed stamped the controversial proposals last week after initial permission was granted by Labour councillors earlier this year.
But it was widely expected that the government's communities secretary Eric Pickles would then have 21 days in which to intervene before the council formally issued final planning permission.
But Waltham Forest Council approved all the final paperwork within 48 hours of Mr Johnson's decision, leaving the government powerless to intervene in time.
When Mr Johnson announced his decision he said it was subject to any action the secretary of state might take.
In a strongly-worded statement, a spokeswoman for the department of communities said it would be looking further into the issue, but stopped short of announcing a full investigation.
She said: "The fact that this decision has been made unusually and unreasonably swiftly, and ahead of any discussion with the department, means that the Secretary of State had no opportunity to consider whether or not he would have wished to call the scheme in for his determination.
"The department is currently considering the issues raised and the appropriate course of action."
But the council has denied the claims and said it acted entirely properly.
A spokesman said: "Throughout this protracted process there has been no indication from the Secretary of State that he was minded to call in the application.
"Indeed, in a Waltham Forest Guardian article from 1 November he stated 'it would be unusual were I to step in. I can only go on the basis of planning issues.'
"Knowing campaigners had been in touch with the Secretary of State’s office, we made checks to see whether the DCLG [department of communities] had contacted us about this matter. No contact had been made and, on this basis, the planning decision notice was issued."
He added: "We find it odd that with local authorities subject to criticism for delays, red tape and bureaucracy we are now being castigated for taking two days to issue a routine document.
"While we know the decision is an unpopular one with some, the process we followed is correct and the development itself will help address the dire need for new housing new jobs in our borough."
Chingford MP Iain Duncan Smith is among those to call for a full investigation.
The issue has opened up a rift among both Conservatives and Labour, with Tories criticising Mr Johnson and Labour council leader Cllr Chris Robbins saying claims by his party colleague Stella Creasy MP that Eric Pickles had 21 days to intervene were incorrect.
In a letter to the Walthamstow Stadium Area Residents Association, council leader Cllr Chris Robbins said that 48 hours was an "entirely appropriate timescale" to turn around the planning application after Mr Johnson's announcement.
But Cllr Matt Davis, leader of the Conservative opposition group at the council, said his group were appalled by the "unprecedented" step.
He said: "It is strange that a council which is not renowned for its quickness in dealing with planning applications can suddenly discover such speed."
The residents association says a judicial review is the only step left now to stop the development. It has instructed solicitors and is looking for funding.
Developers London and Quadrant (L&Q) say the housing scheme will help boost the area and provide much-needed housing.