Housing, more particularly the lack of affordable rented accommodation, was blamed for much of the underlying tension which led to the by-election victory of Derek Beackon in the Millwall ward in September.
There are fears that the development, of 14 two- and three-bedroom houses and flats will fuel racial tension before the May elections.
Ted Johns, one of two Labour councillors for the Millwall ward, said: 'People see this new development being built and then they find that it's actually homes for rent, but then they're told that it's only for black families. You can understand their frustration.'
The co-operative behind the development, La Caye, is one of 63 housing associations for black people in Britain. Two years ago, the Housing Corporation announced it would provide pounds 750m for associations set up for ethnic minorities.
Debbie Noel, a member of the La Caye co-operative, says that although tenants have been told about the situation she 'does not envisage any problems'. 'This man (Mr Beackon) is only one councillor. Why should he affect where people live?' she said.
The fact that the new tenants are all former Tower Hamlets council residents has not been widely publicised.
Mr Beackon said: 'Perhaps in May, when we get three councillors elected for this area, we can start building places and putting local people first. The council are just making the situation worse for themselves.'
Resentment over housing has been brewing on the Isle of Dogs since the Government declared it an Enterprise Zone and set up the London Docklands Development Corporation to regenerate the area in 1981. Few of the homes built were for local people.
Peter Hughes, the Liberal Democrat leader of Tower Hamlets Council, said: 'Projects which are seen to be providing a service for one ethnic group create tension in the area around it. We want to ensure that housing is for everyone.' But he added: 'If one ethnic group wants to develop housing for themselves then good luck to them.'
Housing allocation in Tower Hamlets has been severely criticised by the Campaign for Racial Equality in the past. In 1991 the council was forced by the threat of High Court action to end alleged racist policies.
One young mother living in the development, who refused to be named, said that she had been worried about the move and had even considered keeping her three young children indoors after school hours.
The youngest, aged two, suffers from an illness which makes mobility difficult.
From behind the 6ft fence and security system outside her home, she said: 'Just look at this house . . . I wouldn't have been offered anything like this for a very long time.'