Nine councils in London have lost their High Court challenge against Boris Johnson's plan to relax rules for "affordable rents" in the capital.
A judge said the real issue in the case was "a profound disagreement" between the councils and the London mayor over housing policy and ruled the claim must fail for a number of reasons.
Islington Council, with backing from seven other Labour councils and independent Tower Hamlets, led the bid to overturn an amendment to the London Plan which they believe will squeeze local families out, including those caught by the Government's benefits cap.
At present, council chiefs in central boroughs have been able to restrict rents on social accommodation within new developments to around 40% of the market rent. Under the Mayor's plan, the figure will be raised to 80%.
According to the councils, that would see the weekly rent for a typical three-bed in Holloway rise from £142.57 a week to around £352.
Dismissing the challenge, Mrs Justice Lang said the councils had commissioned evidence "which shows that, if affordable rents are set at or close to 80%, the properties will not be affordable for a large proportion of the eligible households, who have low incomes or are on benefits and subject to the benefits cap".
The judge said the councils wished to have power to introduce local planning policies imposing rent caps below 80%, but the mayor "considers that rent control imposed via the planning system will compromise his policy to maximise the provision of affordable rented homes by rendering delivery of new housing units unviable for developers and registered providers".
Dismissing the legal challenge, the judge ruled: "I consider it is unarguable that the (mayor's) strategy is so misguided or flawed that it will effectively prevent the (councils) from making appropriate provision for affordable rented housing.
"I accept that the strategy may be open to legitimate criticism, but it is plainly within the band on reasonableness."
The mayor was also entitled to conclude that "London represented a single housing market".
Deputy mayor for planning Sir Edward Lister said he was "pleased" with the court ruling but found it "deeply regrettable" that taxpayers' money had been "wasted" in bringing the case to court.
Sir Edward said: "Maximising the delivery of affordable homes in London is the Mayor's top priority.
"Imposing individual rent caps would have significantly constrained financial capacity with the potential to shut down affordable housing supply.
"While I am pleased that the High Court has fully vindicated our position, it is deeply regrettable that taxpayers' money has been wasted bringing this case to court.
"The important thing now is that we all work together to meet London's pressing housing needs."