London's mayor, Ken Livingstone, is set to veto Britain's first £1bn hospital under the private finance initiative after its design was today severely criticised by the government's architecture watchdog.

The project to rebuild the Royal London hospital in east London as an 18-storey block "recreates mistakes made in the 1960s", according to the Commission for Architecture and the Built Environment (Cabe).

It added: "If it were put forward as an office project, it is extremely difficult to imagine it being given planning permission."

Mr Livingstone is expected to use his planning powers to reject the building on the strength of Cabe's objections.

The commission, which reviews all major building projects, has been working with the PFI consortium Skanska Innisfree and its architects HOK for the last two years to improve the design of the new hospital.

But in a letter today to Tower Hamlets council, which is the local planning authority, Cabe complained that the consortium had failed to act on its advice to improve the building.

The letter also suggested that the PFI process did not encourage good architecture. It said: "The fact that the result is in our view a failure in significant aspects is as much a criticism of the process of hospital procurement in this country as of the efforts of the trust or their preferred bidder."

This is not the first time that Cabe has criticised PFI projects. It complained that 17 new PFI police stations in Manchester were "bland" and "disappointing", and it described the first wave of PFI hospitals as "urban disasters".

On the detail of the proposed Royal London hospital it said too many rooms had no windows, that the blocks appeared "jumbled and ad hoc" and patients would be confused by the complex layout. It also objected to the proposed brightly coloured sides of the building.

Cabe said: "What looks new and modish now may look dated even by the time the building is finished, let alone decades later. We believe that buildings have a duty to represent more enduring qualities."

Barts and the London NHS trust, which owns the hospital, has claimed the proposed building is designed for "energy efficiency", but Cabe questioned this assertion. Its letter said: "We have little sense that the project proposes more than compliance with the building regulations in terms of energy usage."

Summing up its objections, the commission said: "The standard of the design, in our view, falls a long way short of what ought to be expected of one of the largest public sector building projects in the country."

This is the latest controversy to hit the Royal London. Last year allegations of a conflict of interest emerged over close personal relationships between members of Barts and the London NHS trust and senior employees of the Innisfree subsidiary that will run the new facilities.

Paul White, chief executive of Barts and the London NHS trust, rejected Cabe's assessment. He said: "We recognise that the trust set Skanska Innisfree a very complex design challenge and we believe that their scheme is an excellent solution for our patients and staff."

David Fison, chief executive of Skanska UK, said: "As well as being a catalyst for regenerating the area, this project is an integral part of plans to improve health services across north east London and the City, and has the support of all NHS organisations, the Department of Health and the government."