Pay-as-you-go Oyster cards are set to be allowed on South West Train services in London after a breakthough in talks between Transport for London (TfL) and the train operator.

TfL confirmed today that the pay-as-you-go service will be accepted on all overground services into Waterloo, including Kingston and Surbiton, by the end of 2009.

At the moment, passengers are only able to load their season tickets on to the cards. But this would allow London's pay-as-you-go Oyster users to travel easily on the underground, buses and overground trains.

Despite South West Trains (SWT) originally being hesitant to sign up to pay-as-you-go, preparations are being made at South West Train stations to install the equipment. The whole project is costing TfL £40m.

A SWT spokesman insisted today that a final agreement had not yet been made and talks were still ongoing with the Association of Train Operating Companies, which represents the 10 firms serving London.

He added: “We're not anti pay-as-you-go. The suggestion that SWT is in a different position to the other train operators is bogus because we are all involved in the same agreement.”

The progress was welcomed by Richard Tracey, London Assembly Conservative Group transport spokesman, who said it was a “long over-due decision”.

He added: “South West Trains are the last rail company in London to sign up for the Oyster system, but finally they are on board.

“However, it is ridiculous that Transport for London has had to expend so much time and effort in persuading SWT to accept Oyster. Rail operators in London need to work together to ensure passengers receive the best possible service.”