Ken Livingstone has given his clearest indication yet that the tram will be extended to Crystal Palace.

At Monday night's council meeting Councillor Malyan said the Mayor had given him a clear indication the extension would go ahead after a meeting of the Association of London Government this week.

But a spokesman for the Mayor's office explained no decision had yet been reached although one was due next month.

She said: "There has been no final decision made. A decision is due in October from Transport for London."

Coun Malyan said: "I am delighted the trams and Crystal Palace have received this vote of confidence from the Mayor. He says the money for the scheme is available and I am sure it will win popular support among residents and businesses.

He added: "What is perhaps the most exciting aspect of the Mayor's enthusiasm for the project is the prospect of simultaneously linking up with the East London Line extension. For Crystal Palace this really is like the old joke of waiting ages for a bus and then finding two coming along together. In this case the two are needed and will be entirely complementary."

Yesterday (Tuesday) the Mayor announced the capital would see Tube and bus fares rise above the rate of inflation from New Year.

More money is needed in order to fund a series of transport projects including the £1billion East London Line extension which will bring the Tube to Crystal Palace, Norwood Junction and West Croydon.

The Mayor said: "In my first term we carried through the transformation of London's bus services. In the second we will start the improvement of the Tube and the investment programmes necessary to give London a 21st century transport system."

The cash fare for single bus journeys will rise by 20p to £1.20, but passengers who use Oyster pre-pay or saver tickets will only pay a £1.

One day bus passes will also increase by 50p to £3.

Single and pre-pay fares on Croydon Tramlink will also rise to match bus fares.