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JUDITH MAYHEW is one of the city of London's most powerful women. This is just as well, as she is fighting one of its fiercest battles. At stake is the ability of the Square Mile to meet the growing accommodation needs of the financial industry. If it cannot do this, lack of space will push firms east to Docklands and, in the long term, may hamper London's ability to compete with Frankfurt.

Mayhew, the chair of the Corporation of London's policy and resources committee, is standing alongside mayor Ken Livingstone in the battle with conservation group English Heritage over plans to build Heron Tower. This 37-storey building is at the centre of one of the most significant planning inquiries for years, and the outcome will affect the future development of the City. The original plans for a mini-Manhattan may have been toned down since 11 September, but Mayhew would still like to see clusters of "mid-sized" buildings springing up in the Square Mile.

There is no love lost between the two sides. Mayhew denies reports that she once hinted that she'd like to see the heads of EH representatives on spikes, but admits she has "no real relationship" with the body. So what about its claim that Heron Tower would be detrimental to the views and prestige of St Paul's Cathedral? This, she says, is nonsense. EH has no right to oppose the scheme, as it falls outside the accepted height restriction for St Paul's and is not in a conservation zone. She adds: "One wonders what EH's locus is, outside of the height restrictions and conservation areas."

Mayhew's main allies are London mayor Ken Livingstone and market forces. "You can't stop market forces," she says, referring to the efforts of both EH and terrorist groups. In fact, the threat of terrorism is part of the capital's competitive advantage: one result of IRA terrorism is that London is better prepared than New York to cope with attacks.

But, although the events of 11 September have not dampened Mayhew's enthusiasm for tall buildings, they did alter her perception of herself. Born in New Zealand 53 years ago, she is now a Londoner through-and-through. During the attacks, she was on a flight to Los Angeles that was forced to turn back to Auckland, where she had been giving lectures and visiting her mum. "It took me six days to get out of Auckland," she says. "I felt quite cut-off – my desire to get back to London was overwhelming. I have strong ties with where I was born, but I'm a Londoner now."

Mayhew has not lost her Kiwi accent, despite spending the last 28 years in the UK. She has also retained an antipodean self-deprecating humour. "When I get back home and catch myself on some interview on London Tonight, I think: 'Have I really got that many wrinkles?'" she laughs.

When I catch myself on some interview, I think: ‘Have I really got that many wrinkles?’

This engaging aspect of her personality prevents her from appearing distant and arrogant. But the facts that Mayhew only catches snippets of sleep during the week and is dedicated to her three careers – she also acts as adviser to Clifford Chance, the world's biggest law firm, and is Livingstone's financial business adviser – allow easy comparisons with Margaret Thatcher.

Intellectually brilliant as a child, she found herself in a class for gifted children. And she has never been lacking in confidence, earning her the nickname "bossy sis" from her brothers. It is these traits that, like Thatcher, have helped her rise to the top in a male-dominated environment.

Unlike Thatcher, however, Mayhew seems to have warmed to a man indelibly associated with the radical left: as well as fighting Livingstone's cause on Heron Tower, she is involved in his campaign to keep the national football stadium at Wembley. On several occasions she uses the phrase "I agree with Ken", and it is clear that she holds him in great respect.

But although she commends Livingstone's aim of increasing affordable housing in London, she warns that he should respect the decision of the borough councils if they choose to have less affordable housing than he would like. She says: "The Greater London Authority must remember that planning gain is driven by council boroughs – they're the ones close to the ground."

In return for Mayhew's support, Livingstone has supported the corporation's plan to redevelop Spitalfields Market for office use. Some locals have set up groups to try and stop the scheme, as they believe it will devastate community life. Not so, says Mayhew, dismissing the complaints as a "smut campaign". She says people have been misinformed, and only a quarter of the market will be redeveloped. "The only part of the market that is due for demolition is one 1950s building, which is extremely ugly," she chuckles. "We hope it will be replaced by a superb Foster building that has been designed to fit in with the old market building." The office development is vital for the area, Mayhew adds, as it will provide jobs as well as four acres of open space for one of the most deprived areas in London.