Southwark is asking pounds 1.5m for the property, which comprises 16 late Georgian and early Victorian terraced houses with stuccoed facades in Camberwell Grove.
One side of the street is occupied by a collective of artists, who have accused the council of not doing enough to keep their community together.
They include Pru Spiegel, a hat designer for Vivienne Westwood, Janette Swift, a successful broadcaster on arts and design.
In all 40 artists, who formed the pressure group, Grove Housing, say they have worked together as a collective for up to 10 years to improve the condition of their homes, establish gardens and develop a functional community.
The Camberwell Grove houses, which were Grade II listed in 1972, were put on the English Heritage buildings-at-risk register three years ago because some of them had become dilapidated.
Southwark, which acquired the properties in the late Fifties and converted them into 66 separate flats, says it does not have the resources to restore them to their former glory, and that, as housing, they are beyond council needs.
But the artists argue that the condition of the buildings varies widely and that some of them at least could be retained as social housing.
Southwark originally let the terraces as short-life housing in the mid-Eighties, through London and Quadrant Housing Association.
Despite their short-term leases, some tenants decided it was worthwhile to make improvements, installing new baths and toilets and refurbishing communal areas.
They point to the lawns and ponds and the wildlife habitat they have established, which led to the garden being included in the Camberwell Society's Open Gardens Day two months ago.
Janette Swift, author of the book Rooms from Remnants and a broadcaster for the Carlton television programme Capital Woman, lives at 208 Camberwell Grove, described as in fair condition by English Heritage.
'We feel the council has grouped this side of the street with the east side, which is mostly squatted. We have not only formed a community but kept the buildings in good working order, no thanks to the council.
'Southwark seem to be flouting their policy which says that housing which becomes available should be made into social housing.
Finlay Cowan, a book cover designer, said: 'The council are selling off the family silver. It all seems quite callous.
A council spokesman said: 'This sort of thing is common all over London with short-life houses. They throw their hands up, saying 'they are making us homeless' when they knew what the situation was to begin with.
Three of the flats on the west side of Camberwell Grove have been vacated. Now housing association workers have boarded them up and begun clearing the interiors.
Phil Maybey, assistant director of London Quadrant's short-term housing unit, said: 'We are required to hand properties back to Southwark with vacant possession.
'We are not stripping out bathrooms and sinks for the sake of it. We have to make the properties unattractive to squatters - and this is a high risk area for squatters.
The housing association made offers of alternative housing to some tenants. 'But there is very little classic short-life housing available nowadays, said Mr Maybey.
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