There are "reasonable grounds" to suspect that the Royal Borough of Kensington and Chelsea and its Tenant Management Organisation committed corporate manslaughter, Scotland Yard announced yesterday.
In a letter circulated to survivors of the Grenfell Tower fire, the Force confirmed that officers had notified the council that they may be charged for their role in the blaze which left at least 80 people dead.
As part of the investigation, which has drafted in experts from the 9/11 terror attack and more than 200 Metropolitan Police officers, senior executives from both organisations will be formally interviewed.
The update, which was sent to survivors yesterday afternoon, stated: "We have seized a huge amount of material and taken a large number of witness statements.
"After an initial assessment of that information, the officer leading the investigation has today notified Royal Borough of Kensington and Chelsea and the Kensington and Chelsea Tenant Management Organisation that there are reasonable grounds to suspect that each organisation may have committed the offence of corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007."
Welcoming the news, Samia Badani, a resident association chair of neighbouring tower block Bramley House said that it would reassure the community amid fears that their concerns were being ignored.
"I'm very pleased, I think over the years we have had a very good relationship with local police and the relationship with the council is the opposite," she said.
"We are so bruised in the community that we needed some reassurances so it's a step forward."
It comes more than a month after David Lammy, MP for Tottenham, accused the council of the offence, with senior executives in both RBKC and TMO resigning in the days that followed over accusations that they ignored a catalogue of warnings over fire safety.
And on Wednesday it was revealed that the council had been warned by the Fire Brigades Union in 2010 that building the Kensington Aldridge Academy - a secondary school at the base of Grenfell Tower - would create "huge difficulties" in the event of a fire.
Commenting on the logistical difficulties faced by firefighters during the rescue operation, Lucy Masoud, a senior FBU official, said that changes to the area, "including the academy" should be included in the public inquiry.
Meanwhile, Grenfell survivors have called on the chair of the public inquiry, which is running alongside Scotland Yard's criminal investigation, to bring charges against officials implicated in the disaster.
However, Sir Martin Moore-Bick, chair of the inquiry, told a meeting gathered at Notting Hill Methodist Church on Wednesday that he had "no power" to bring about prosecutions in relation to the issue of criminal responsibility.
His comments are likely to fuel mounting frustration among survivors, who have already stated that their scepticism in Sir Martin's ability to "do us justice".
Commenting on the investigation, a Metropolitan Police spokeswoman said: "This is a complex and far reaching investigation that by its very nature will take a considerable time to complete.
"The Met has made a commitment to the families who lost loved ones in the fire and survivors that they will be kept updated, as far as we possibly can, as the investigation continues."