Squatter claims pounds 400,000 home the council forgot.
Lambeth council is attempting to oust Mr Michael Stewart, aged 57, from the four-storey house in Stockwell Park Road, London, following the discovery it has owned the property for years.
Mr Stewart, who calls himself Michael Archangel and Michael XX, is fighting Lambeth council's bid to eject him.
He is exercising "squatter's rights" over the Georgian house, saying he is now the rightful owner of the property because he has lived there for more than 12 years. Lambeth council says he cannot claim squatter's rights because he has not lived there continuously for that period.
Conservative group leader Mr John Whelan criticised the Labour-run Lambeth council, saying: "This is yet another blunder involving a squatter. The council doesn't know how many properties it owns. It smacks of complete incompetence."
Mr Stewart is a professional squatter whose action group Mustard - the Multi-racial Union of Squatters To Alleviate Racial Discrimination - was evicted in 1975 from Chepstow Villas, Notting Hill, the home Mr Michael Heseltine had sold to a Saudi Arabian princess.
The latest legal battle comes after Lambeth Council had to give up a pounds 200,000 home in July to squatter Mr Timothy Ellis, who had illegally occupied the property for 16 years, after the High Court ruled the council had made no attempt to look after the house.
A Lambeth council spokesman said: "We are going to continue our drive to ensure unlawful occupants of council properties are evicted at the earliest opportunity."