Khayelitsha's BM section, ravaged by fire on New Year's day, will be upgraded, the City of Cape Town said on Wednesday.
"Any suggestions that the City has not been active in the community to ensure that it is upgraded in a caring and dignified manner are completely untrue," human settlements mayoral committee member Ernest Sonnenberg said.
Three men were killed, one was seriously injured and more than 3000 people were displaced in Tuesday's fire. Approximately 800 shacks were destroyed.
Sonnenberg said it was alleged the fire was caused by drunk people who had become negligent. He said discussions and plans about upgrading the area had been in the works for "a long period of time".
Ultimately, local government wanted to ensure that residents received tenure and necessary services.
"The city has been negotiating with the various landowners concerned to purchase land."
At the moment, the city's informal settlements department was working to improve safety measures against fire and floods, and provide access to electricity for all residents.
Sonnenberg said the biggest problem in upgrading the area was its high density. Although local officials had tried to meet with residents to explore possible relocations, this had been met with resistance. Sonnenberg said this had delayed the planned upgrade.
He urged residents rebuilding their structures to position them at least three metres apart.
"Unfortunately this is not always adhered to, making it very difficult for firefighting vehicles to gain access when attempting to extinguish a fire."
On Wednesday efforts were underway to help residents affected by the fire. The public was invited to make donations such as food, wood, paraffin, blankets, and money.