Community groups linked to Ken Livingstone's disgraced race adviser Lee Jasper have been handed a building rent-free by Boris Johnson's development agency.
Starlight Music Academy and Code 7, run by friends of Mr Jasper, have been told they can use Offley Works in Kennington without paying rent to its owner, the London Development Agency.
Today the move was criticised by other community groups doing similar work, who said they were struggling for funding and had never heard of Starlight.
The 6,000 square-metre building was at the centre of the City Hall grants-for-cronies scandal when Mr Jasper was accused of channelling millions of pounds of public money to friends' projects.
Mr Jasper was forced to resign after leaked emails revealed he offered to "honey glaze" Karen Chouhan, the married director of two of the projects.
Offley Works was also home to Brixton Base, now under investigation over allegations of fraud.
Starlight, a sub-tenant of Brixton Base, was brought into the building by Mr Jasper. Its website describes Mr Jasper as a "friend of Starlight".
At a meeting in Lambeth town hall this month, Mr Jasper lobbied for Starlight and Code 7, which uses music to work with teenagers, to keep the building.
The LDA confirmed it had dropped plans to redevelop Offley Works and offered the groups a new rent-free lease for a year, with the possibility of extension. Starlight said yesterday its aim was to obtain a 99-year lease on the building.
Starlight claims it has provided arts outreach training for young people at risk since 1997, and in Lambeth since 2006. However, there are no current courses shown on its website. Its listed telephone number is a mobile which was switched off, and it failed to respond to emails from the Evening Standard posing as a would-be student asking about outreach courses.
Other local community groups today expressed surprise over the deal. Oval House Theatre, just three streets away, helps about 3,000 young people every year and is struggling for funding.
Director Deborah Bestwick said: "I've never heard of Starlight and I would expect to since we do the same sort of work. I wish people would fund projects that are already proven to be effective."
Starlight says it has "transformed the lives of many young people, helped to build community cohesion and helped to reduce gun, gang and knife crime in the area and deliver vital after school and holiday services and access to facilities for young people".
Director Shanice Duffus said: "If nobody has heard of us it is because we are so busy doing the business we haven't got time to blow our own trumpets." She said Starlight did not offer accredited courses but gave students informal qualifications, "such as confidence".
She said courses were held most nights of the week and several students had gone into professional performance, modelling or teaching, but the group kept no formal records.
Starlight also claims that the academy's instructors include a former EastEnders actress and a Mobo-award winning singer.
Mr Jasper confirmed yesterday that he had lobbied in favour of the projects.
In a statement, the LDA said: "The redevelopment of Offley Work has been postponed due to the current property market. The LDA has decided to offer the current leaseholders a further year's lease."
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