A toddler was sent home "unwell" from a nursery after a nearby gas leak at the demolition site of Catford’s prefab estate.
Work began last week on bulldozing the 1940s homes in the Excalibur Estate, built by German prisoners of war, where 371 new homes will be rebuilt.
Nursery staff at Dalton Preschool, which is located opposite the site in Baudwin Road, were concerned for infants after a strong smell of gas came from the site on July 8.
Deputy supervisor Yvonne Allen said: "We had one little boy falling ill, so we had to send him home.
"The kids go out in the garden and it is literally just across the road.
"There was about 10 minutes of the smell of gas and it did travel into the building."
Staff at the preschool, which is based at St Mark’s Church Hall and caters for 20 two-and-a-half to four years, were unsure whether to keep the children outside or inside after the smell leaked indoors.
Elisabeth Blanchet, who runs a pop-up exhibition of photos, memorabilia, and filmed interviews about the prefabs, voiced concern about the building works.
She said: "The bulldozing caused a gas leak. The smell was so strong. The children from the nearby nursery couldn't stay outside."
Construction company Denne Construction says a small domestic gas supply was uncovered which had not been on the site plans.
The company says it notified the gas board immediately and they attended the site within two hours.
It also moved to reassure residents who were worried the bulldozing work might be sending potentially harmful asbestos particles from the prefabs into the air.
It comes after a YouTube video showed footage of dust rising during the demolition work with claims the particles could have been contaminated.
A Denne Construction spokeswoman said: "We would like to reassure people that at no point were members of the public, or site workers, at risk from the activities being carried out on site.
"We have reviewed the footage and allegations in this video and confirmed with our Health and Safety team that all activities are being carried out in accordance with guidelines produced by the Health and Safety Executive, as well as our own policies and procedures."
She added: "During demolition we uncovered a small domestic gas supply that was not detailed on any of the plans received prior to work beginning on site.
"We notified the Gas Board immediately and they attended the site within two hours.
"The Gas Board confirmed that the issue had been dealt with safely and appropriately.
"At no time was there any risk to public health or safety. Any measures were purely precautionary.
“Had the nursery contacted us directly at the time, regarding their concerns, we would have been able to allay any fears and reassure staff that the minor leak had been dealt with quickly and effectively, without compromising safety."