Blackfriars Investments told the AJ that planners have now given the go-ahead for a hotel project by commercial specialists Moren Greenhalgh.
RHWL originally worked up environmentally friendly plans for a 34-storey tower on the site on Gambia Street - close to Will Alsop's Palestra, which is currently under construction.
But Blackfriars chief Mallory Clifford claimed that after CABE criticised the tower's designs he decided to go with the hotel option for the site.
The developer said: 'CABE weren't fully supportive - in fact they were quite critical all over - and before we could do anything about it we were approached by Travelodge with different proposals.'
Moren Greenhalgh's hotel was given the green light by Southwark planners last month.
RHWL's designs were worked up in 2003 and incorporated photovoltaic panels covering the building's south-facing facade and a windmill on its roof.
The energy use of the residential elements of the scheme was due to be kept down by the introduction of moving walls - which could seal each window after dark.