A proposed city academy in Bexley, south London, could become the first school to benefit from a change in the law should Labour win the general election which is expected to be held next month.

David Gerrard, chairman of the property investment firm Minerva plc, is donating pound;2 million to the Bexley Business Academy, an 11-18 school set to replace failing Thamesmead Community College next year. He wants the school to include a primary section eventually.

City academies, technically state-funded independent schools with business backing, can be created due to legislation which launched the city technology colleges under the Conservatives in the 1980s. But the current law only allows them to cater for 11 to 18-year-old pupils.

A school caught in the media spotlight ollowing the death of 10-year-old schoolboy Damilola Taylor is to become the country’s tenth city academy, ministers announced this week. Warwick Park comprehensive, which is 100 yards from the primary school Damilola attended, was subjected to brutal criticism by some newspapers after the boy’s death last November, despite recently having been given a clean bill of health by inspectors.

Announcing the plans, school standards minister Estelle Morris said Warwick Park already bore the hallmarks of a city academy school. It had strong community links and excelled in the performing arts.

It will be replaced by Peckham City Academy, which is being backed with pound;2m from Conservative peer Lord Harris of Peckham, who has also sponsored two city technology colleges.

It appears ministers have overruled a suggestion from Lord Harris in an interview last year that his donation was conditional on the new school being called the John Major Academy, in recognition of the former Prime Minister.