Just wanted to know people's experiences with letting agents particularly in East London. I have some nightmare experiences with one in particular(not sure if you can name estate agents). Would highly advise people to stay away from these dodgy agents as reluctant to give back deposits are the least of the dodgy things these guys do.
Go to citizens advice and ask for details of local solicitors that do free consultations (google may also help). Explain to them the situation and take your email proof that the agent had entered into an agreement with you re the reduced rent. The aim of discussing with the solicitor would be to get his view on your likely success in small claims court. If he gives good mumors then take the agent to the small claims court and ask for your deposit back. Small claims is fairly simple and the fee is small. It is also fun!
I had a similar situation years ago, where the agent ran off with the rent we had paid him. The landlord refused to pay our deposit back, but as our contract said we needed to pay the agent our rent, then the landlord had no where to go and had to pay back our money.