Up to 100 residents are being forced out of their homes for up to three years due to “potentially combustible insulation”.
Residents of the award-winning Bridport House in London have been told they will have to re-locate within 12 months due to “serious” structural errors.
Hackney Council confirmed legal action will be taken against Willmott Partnership Homes, who built the block.
One resident said: “It’s disgusting the way we’ve all been treated.”
The resident, who did not want to be named, told the Local Democracy Reporting Service: “We’ve all lived here for years, and you don’t want to be moving out and moving back in again.”
Pauline Millgate, another resident, said she was “annoyed” about how the council have handled the property.
She said: “We’ve been here for eight years and we’ve had nothing but ongoing problems with leaks, holes in the roofs and holes in the floor.”
Michael Jones said he felt “like a prisoner” in his own home.
“The scaffold has been up for nearly 18 months and we’ve been told we can’t go out on the balcony,” he said.
The 41 families living in the property will be offered another temporary or permanent home in the borough while the work is carried out, but they could be displaced for up to three years.
Families moving permanently are to be offered a one-off home loss payment of £6,300 alongside other financial incentives.
Bridport House on the Colville Estate won awards awards for design and engineering when it opened in 2011.
Since then the building has suffered a litany of problems including falling roof tiles, crumbling bricks and flooding.
Investigations have now revealed more serious defects including missing fire barriers and flawed brickwork, balconies and windows.
Heat insulation was found to be “a combustible material”, but cannot be tested.
Hackney Council claimed the London Fire Brigade had concluded the building remained safe for residents, but the brigade has denied this.
The council will now open a procurement process for the £6m repair works.
Mayor of Hackney Philip Glanville said: “We are sorry for the failures in the construction of Bridport House, and for the huge disruption residents continue to face.
“Moving residents from homes we all hoped would be new and permanent is not an easy decision, but our first priority is their safety.
“We will be taking legal action to hold those responsible for these failures to account. We also should have done a better job.”
Willmott Partnership Homes said it was “disappointed at the way the problems at Bridport House have been portrayed by Hackney Council”.
The builders said they could not comment fully “in view of the threat of legal action”.
A spokesman said: “This is an extremely complicated matter, significantly exacerbated by various aspects of the Building Regulations recently being reinterpreted following the Grenfell tragedy.
“We too want to say how sorry we are that matters have turned out in this way, and of course for the concern this will have caused to the residents at Bridport House.”