He was later found collapsed in nearby Further Green Rd by paramedics from London Ambulance Service, who took him to a central London hospital where he died at 3.37am. Police were unable to confirm whether the suspect had been stabbed with the screwdriver.
The second suspect fled the scene before police arrived and is now being hunted by the Met's Homicide and Major Crime Command.
Gordon Williams, a local resident, said: "I could hear people moaning in the street and just thought it was someone drunk. I saw the body laid in the street and another guy jump in a van and leave.
"I leaned over him and tried to reassure him. There was a lot of blood."
In a statement Scotland Yard said: "At 00:45hrs on Wednesday, 4 April, police were called by a homeowner to reports of a burglary in progress at an address in South Park Crescent, Hither Green SE6, and a man injured.
"The 78-year-old resident found two males inside the address. A struggle ensued between one of the males and the homeowner. The man, aged 37, sustained a stab wound to the upper body."
The home owner suffered bruising to his arms and his injuries are not life threatening.
Police arrested him on suspicion of grievous bodily harm before then arresting him on suspicion of murder.
He was taken to a south London police station where he remains at this time.
In February alone there were 115 incidents of crime reported to police for the post code area covering South Park Cres, including a number of burglaries close to the pensioner's home and a number of cases of criminal damage, vehicle theft and sexual violence.
Farmer Tony Martin shot dead burglar Fred Barras, 16, and wounded the teenager's accomplice Brendan Fearon, 33, after confronting them late at night. Martin was jailed for manslaughter. Photo / Getty
The incident recalls the case of Tony Martin, a Norfolk farmer who was convicted of manslaughter after shooting a burglar he discovered in his home in 1999.
Martin was initially convicted of murder, but this was later reduced to manslaughter on grounds of diminished responsibility.
Neighbours and victims' groups sprung to the pensioner's defence yesterday.
Clem Williams, 58, a martial arts instructor who has lived on the road for 20 years said: "It's a very quiet road, normally we do not get police incidents down this road.
"My personal opinion is why were the men at his house? The man has a right to defend his home. They should let him go."
Sylbourne Sydail, chairman of the local neighborhood watch group, said: "A man should have the right and be able to defend their home. This reminds me of the Tony Martin case.
"We have done good work on the watch including shutting down a brothel house and implementing metal gates to stop people walking down the alley ways. We're trying to make it safer."
Norman Brennan, a former police officer who represents victims' interests, said police were required to arrest the pensioner in order to investigate whether he had acted in self defence.
But he said he would be "amazed" if he was prosecuted over the death.
"The law says that a person can use reasonable force when defending himself, his family or property. If the intruder is running away the threat has diminished but if that person stays where they are that's an assault and if they are armed with a weapon then it would be regarded as aggravating circumstances," said Mr Brennan.
He added: "I cannot see any jury convicting someone in a case where the householder, for example, takes a knife and in a struggle with the burglar injures him.
"There were other factors in the Tony Martin case that led him to be convicted of manslaughter."
Another resident living in the street where the incident took place said: "I moved here because I thought it was a safe, nice, pleasant area but this is shocking."
A neighbour who has lived in the area for 10 years added: "We've heard of break ins over the years, but nothing like this."
