Critics allege the new organisation will be unaccountable and is the latest example of secrecy by members of Britain's most exclusive local authority.
Funds donated into a trust that was set up in the 15th century for the maintenance of London Bridge have grown so fast that the trustee, the Corporation of London, cannot spend them quickly enough.
The Corporation is negotiating with the Charity Commission to be allowed to use most of the surplus - estimated to be at least pounds 177m by the end of the century - on a wider range of charitable services in the capital.
News of the Corporation's plans concerning the Bridge House Estates trust fund has only just emerged, although talks have been going on for more than two and a half years.
The public and press have been excluded from all discussions. No charity has been consulted.
The Corporation, which controls the City of London, the financial centre of the capital, argues that although all the members of the council are also the trustees, the Trust is a separate private organisation and there is no need or obligation to consult the public at this stage.
The Corporation is the legal owner of the Trust's property, whose profits are used on the upkeep of four Thames bridges: Tower, London, Southwark and Blackfriars.
In March last year it had a surplus of pounds 44m. In the year 1993/4 the Trust is expected to make pounds 28m, of which about pounds 8m will be used on the bridges. Its assets are worth more than pounds 300m.
George Allan, chairman of the City of London Environment and Amenity Trust, a pressure group, believes the Corporation is ignoring normal democratic procedures in creating what is likely to become one of the country's largest charities.
He said: 'The Corporation is ridiculously old and antiquated. This is public money that should be used to help the needy of London as a whole, not just the well-off areas of the capital. It should not be left open to possible abuse.
'A very small group of individuals will be able to control millions of pounds, distributing it to whatever cause they see fit - this cannot be right.'
Michael Cassidy, chairman of the policy and resources committee, denies there is a problem. He said: 'When dealing with the Trust we are wearing the hat of a trustee and don't need to consult the public. The fact that the members of the council are looking after the funds is immaterial.'
He added that consultation would take place after Parliament had given permission to spend the surplus. It is expected to vote in favour of the move next month.
The Bridge House Estates is one of more than 20 trusts managed by the Corporation. These include the Leonidas Alcibiades Oldfields Charity, which has dollars 42,949 (now pounds 28,800) invested. The interest must be used as contributions to the police court poor boxes in the City of London.
Another trust, the Signor Pasquale Favale Gift, was set up in 1880 after pounds 720 was bequeathed for the provision of three dowries for 'poor, honest' young women born in the City of London.
The Corporation, whose central body, the Court of Common Council, evolved from the 12th century, has used its historic standing - it predates Parliament - to avoid most local government reform, leaving a bizarre constitution.
Of the 20,000 people eligible to vote for the local authority's 132 councilmen and 25 Aldermen, only about 5,000 are residents of the Square Mile that makes up the Corporation's boundary. The remainder are business voters.
Any trader or partner in a firm liable for rates may register to vote, and may do so in any and all wards where he pays rates. One firm has 750 partners and thus 750 votes.
This has led to some controversial elections. At a by- election in 1991 at the Dowgate ward, there were two candidates. One was a resident and the other a solicitor in a legal firm. The ward had 76 voters, which included 44 partners of the legal firm, 19 based in Liverpool and Manchester. They were all given a postal vote. Not surprisingly the local man was defeated, by 40 votes to 12.
But a spokesman for the Corporation said: 'The City is a business district that is phenomenally successful and provides a lot of money for the country, so why meddle with it? It's not broke, so why fix it?'