The child actor lives in an illegal structure made of tarpaulin sheets with his one-eyed mother and TB-suffering alcoholic father, reports dailymail.co.uk.
Officers from the Brihanmumbai Municipal Council said the media attention on Ismail's family brought attention to the illegal home and it will be razed within a week.
Assistant Municipal Commissioner Umashankar Mistry said: "The plot has been earmarked as a playground and we will demolish all illegal settlements. We will fix the schedule soon, but it will be in a week."
Azharuddin said: "I want some proper place to live with my parents."
His father said: "We cannot live like this under the threat of demolition. If my home is broken down by the BMC again, we will have nowhere to go. We have been told that we may be getting a free flat sometime, but we need it now."
The mayor of the city might change matters. Mayor Shubha Raul said: "We can counsel the family with the help of NGOs, which can work closely with the family to develop good values. The present is very important. If the producer and director have set money aside in a trust for the children's future, we can work for their present."