The simmering row between London’s political leaders and central government over transport funding is escalating on a fresh battleground: possible legal action over suburban station car parks. London’s mayor, Sadiq Khan, has urged the transport secretary, Grant Shapps, to rescind his decision to block a planned affordable housing development on a tube station car park. Khan has instructed TfL to “explore all options” including seeking a judicial review after Shapps stepped in to veto the building at Cockfosters, north London, using a clause in the 1999 GLA Act. The development was approved by Enfield council last month and would have brought 351 new homes as well as open spaces. In a letter to Shapps seen by the Guardian, Khan said he was “deeply concerned” at the move. He said: “At a time when London is facing a serious housing crisis, I cannot understand why you would prioritise keeping a car park over building desperately needed new homes.” Khan said he was “very surprised … given the very positive conversations I have had with the secretary of state for the Department for Levelling Up, Homes and Communities [Michael Gove] about the government’s ambition to build the new homes families in this country need.” The development would have retained 47 parking spaces at the Piccadilly line station, out of the current 336. About 2,000 local residents opposed the scheme, with support from Theresa Villiers, the MP for the nearby marginal Chipping Barnet constituency, where similar plans to redevelop car parks at High Barnet for housing are proposed by TfL. Villiers, a former transport minister, has argued that the car parks “perform an important park-and-ride function, helping people get on to the public transport network”. After Shapps issued his veto earlier this month, she said: “We have saved Cockfosters from tower blocks.” The row comes as TfL is pushing for a long-term funding settlement from the Department for Transport as it recovers from the loss of billions in fare income during the Covid-19 pandemic. It is dependent on emergency financial help. It was given £200m last month by Shapps to last until June, which was granted with conditions that Khan raise revenues. Khan said in his letter, which was also sent to Gove, that prioritising “car parking spaces over hundreds of much-needed homes sends a worrying and frankly contradictory message from government. The scheme would also have generated much-needed revenue for TfL to reinvest in public transport, so this decision also undermines the agreements we are negotiating regarding TfL housing delivery.” The mayor said he had “asked TfL to explore all available options to ensure that this development can go ahead”. Responding to questions in the Commons this month, Shapps wrongly claimed the plan would have “removed all but 12 car parking spaces”, adding: “While I am keen to get people using active travel and all forms of travel, the idea that only 12 cars a day would turn up was ludicrous.” He added: “It would just have meant other cars parking on the streets and inconveniencing residents. I encourage the mayor of London to come forward with better plans than that.” A Department for Transport spokesperson said: “When redeveloping land used by transport hubs, the transport secretary must approve of all plans but in this case the application did not provide adequate parking for passengers. Transport for London can submit alternative plans should they wish to do so.” Gove’s department has been asked to call in the planning process for a ministerial decision. It declined to comment.