The London Overground will be extended from Clapham Junction to join the East London Line following an agreement between the Government and Mayor announced this morning.

Transport Secretary Geoff Hoon and London Mayor Boris Johnson said the extension would be the final link in giving the city a complete, orbital rail network.

This means phase two of the East London Line will be constructed before the 2012 Games at a cost of £75 million.

Mayor Boris Johnson welcomes the scheme

The scheme will link Surrey Quays on the East London line extension to Clapham Junction, providing direct links to the City and Docklands.

The Department for Transport is providing £64 million for the East London line extension Phase 2 and other transport improvements. The Mayor and TfL will be contributing £15 million towards the cost of the scheme.

Phase 2 will run through the boroughs of Southwark, Lambeth, Wandsworth and Lewisham between Surrey Quays and Clapham Junction stations.

It will provide four trains an hour in each direction between Dalston Junction and Clapham Junction calling at all stations en route.

Mayor Johnson said: “This is tremendous news. We can finally get cracking on a vital section of track that will orbitise our Overground rail services.

“I promised Londoners that where funds were made available we would build the improvements they need.

“And it will be a real achievement when our Overground services are fully oysterised.

“I am delighted that a long hard slog of negotiations between ourselves and the Department of Transport has borne fruit that will result in a superb new service for thousands of Londoners.”

Transport Secretary Mr Hoon said: "I am pleased to announce an additional £64 million for TfL which will allow them to press ahead with the further extension of the East London Line to Clapham Junction and deliver a number of other transport improvements in London.

"The East London Line extension will deliver a key rail link south of the river and improve local transport for Londoners by providing more choice and better access to other parts of the capital."