Construction of a new £2.2 million public square in the heart of Clapham could start as early as April next year.
New cycle lanes, wider pavements and pedestrian crossings will be added to the gyratory system to the north of Clapham Common and The Pavement slip road pedestrianised.
Councillor Lib Peck, Lambeth’s cabinet member for regeneration, said: "The scheme will transform the public space in Clapham Old Town, give a new heart to the area and bring huge benefits to both residents and businesses.
"Once completed it will rival other major successful regeneration projects we have seen over the past few years."
The project is subject to a final approval from Transport for London, who will provide the majority of the funding.
Lambeth Council plan to contribute about £600,000. Coun Peck said the proposal has been several years in the planning and she is hopeful TfL will give it the green light.
The project is part of a £20 million pound package of investment across Lambeth - the biggest in the council’s history - to tackle potholes and make roads and footpaths safer.
Under the Clapham Old Town Regeneration Project, Venn Street has already undergone considerable redevelopment, becoming a more pedestrian-friendly car-free area.
The council is also starting a series of works around Clapham Common North Side and Rookery Road to widen footpaths, introduce new pedestrian crossings, install a two-way southbound cycle path on North Side, resurface the road and plant new trees.