In a letter to the civic body today, the MHA directed the New Delhi Municipal Council (NDMC) not to go ahead with the proposal, NDMC chairperson Jalaj Shrivastava told PTI.
The proposal was passed on June 20 after Delhi Cantonment MLA Surinder Singh requested for an accomodation after he became a member of NDMC by virtue of his election to the Delhi Cantonment constituency.
The resolution ensured allocation of houses in the NDMC area for New Delhi MP and MLA, and Delhi Cantonment MLA, and was sent to the Home Ministry for its approval few days ago.
MHA rejected the proposal saying that it was against the NDMC Act 2011 which allows allotment of residences to nominated members and not to elected members, officials said.
The proposal was seen as an end to the search for a house by Kejriwal who was the former Delhi chief minister.
Kejriwal had zeroed in on a house in Civil Lines area here after he was asked to vacate his official Tilak Lane residence, but the house became entangled in a legalities over ownership between the owner of the house and his brother.