The square, created by London-based urban designer East, formed the central focus of a wider regeneration scheme on a previously derelict site. Developments around the square include office and retail space, apartments, a hotel, a cinema, a restaurant and the continuation of a weekly farmers' market.
It beat entries including Waterside Gardens in Bexley, Oxford Circus Streetscape improvements and Braham Street Park in Tower Hamlets to claim the award.
Southwark Council developed the project in partnership with East, Igloo Regeneration and the London Development Agency.
Deputy mayor of London Sir Simon Milton said the revitalised square had successfully integrated public and privately managed space providing a flexible arena for everyday activities and special events.