An extra £5 million will be provided for a project to build the new station on the Windrush line between Queens Road Peckham and Surrey Quays.
A Surrey Canal station was first proposed when the existing Overground line was extended in 2012 to Clapham Junction.
However, the stop was never built, and the project was put on hold for several years.
TfL was able to restart design work on the station after a £25 million contribution from local developer, Renewal Group, last year.
The developer intends to build about 3,500 homes in South Bermondsey, with the new station located nearby.
The grant means that fewer affordable homes will now be provided as part of this development.
TfL has said that once concept design work is finished in early-2026, it will be able to give a clearer timeline for when the station will be built.
The station would be located on Surrey Canal Road, adjacent to Millwall Football Club’s stadium.
