The project, one of the capital's biggest urban renewal schemes, will be designed by architect Terry Farrell and envisages a mixed development of flats, shops, restaurants, leisure facilities and offices. The site, known as Paddington Basin, has been earmarked for development by Westminster City Council for a decade, but proposals for a large-scale office scheme fell foul of the commercial property crash in the late 1980s.
"We think the area has got enormous potential," said Mr Bernerd, who highlighted the benefits expected from the opening of the high-speed rail link between Paddington station and Heathrow airport next year.
Mr Bernerd is also keen to develop the Grand Union canal waterfront which abuts the largely derelict site.
Chelsfield is seeking planning permission to develop Paddington Basin in partnership with Godfrey Bradman, the 1980s property tycoon.
A flurry of property deals in the past few months has left Chelsfield and Mr Bradman owning the eight acres of land at zero cost and pounds 10m of working capital to begin development of the site. "We are not unhappy with that," Mr Bernerd said last night.
Chelsfield became involved in August when it paid pounds 3m for 10 acres of land from Trafalgar House, whose new owner, Kvaerner, has been clearing out some of its property portfolio.
It was announced yesterday that Frogmore Estates has agreed to pay pounds 20m for two acres of land at the eastern end of the basin, and reached a pounds 5m settlement from Lonrho, owner of the adjoining Metropole Hotel, in a dispute over revised access rights.
The deal with Lonrho was struck just before the sale of the Metropole hotel chain to Stakis was announced last week.
In total, Chelsfield's proposals for the Paddington Basin are expected to cost several hundreds of millions of pounds, though the scheme is much smaller than the pounds 500m, 50-acre shopping complex being developed by Chelsfield at nearby White City.
Talks are now said to be under way with nearby landowners to produce an overall plan for the Paddington site. Those involved also include Railtrack, St Mary's Hospital and Regalian, the property group.
News of the Paddington venture lifted shares in Chelsfield 6p higher to 268.5p. The group has come a long way since it was floated three years ago.
It has seen its market value double on the back of a number of large deals. As well as White City, it has taken control of the Merry Hill shopping centre in the West Midlands and is a member of the consortium selected to redevelop the Treasury building in Whitehall.