Subject to a number of consents and to the views of residents, the merged housing association, which will be named Peabody, will be responsible for 55,220 homes across London and the South East.

The new Peabody will have a combined turnover of roughly £618m, with 11,825 new homes in the pipeline.

The formal merger is expected to complete around July 2017 and will see Peabody’s long-serving chief executive Stephen Howlett stand down after 42 years in the sector, 12 of which were at Peabody.

In a joint statement, Lord Kerslake, chair of Peabody, and Ian Peters, chair of Family Mosaic, said: “The new group will build on the track record, capabilities and shared values of Peabody and Family Mosaic to create a truly distinctive organisation. Our combined scale and London focus will enable us to do more together than we could achieve alone.

“With a combined turnover of around £618 million, we will continue to invest in our 55,000 homes, so that they meet the needs and demands of 21st century families now and for generations to come.”

A spokesperson for both organisations added: “Family Mosaic and Peabody are an excellent fit – we share the same values and are seeking the same outcomes for our residents. We can invest more, build more, and through our combined strength offer better services.

“This will give us far greater capacity to do more to benefit those in greatest need. We will be able to deliver a housebuilding programme that we couldn’t achieve by ourselves. In a nutshell, the merger would mean more independent residents; stronger communities; more and better homes.”

Also on Wednesday, housing associations L&Q and East Thames announced the completion of their merger and details of a £2.6bn financing package to fund the building of new homes.

More mergers between the UK’s 1,500 housing associations look likely.