Free bus travel will be extended to all children under 16

Bus fares will increase by 20%, taking the cost of a single journey to £1.20 and a one-day pass to £3.

An adult all-day travelcard for zones one and two in peak-time will go up from £5.30 to £6.

Mayor of London Ken Livingstone said rises would help pay for the capital's £3bn investment in public transport.

Brian Cooke, chairman of watchdog London Transport Users Committee (LTUC), advised passengers to make sure they are already receiving any available discounts.

NEW TUBE FARES Zone 1 single: £2 (same) Week Travelcard Zone 1 £18.50 Month Travelcard Zones 1-4: £116.80 Year Travelcard Zones 1-2: £856

Mayor of London Ken Livingstone, who warned more price hikes could follow, said tough choices were needed to "reverse generations of neglect".

The government has given Mr Livingstone permission to borrow up to £2.9bn to fund projects such as the extension of the Tube's East London Line and the Thames Gateway Bridge.

Free bus travel for the under-11s will be extended to all children under 16.

Single zone one Tube fares have been frozen at £2 and, to encourage more people to travel outside rush hour, there will be discounts on off-peak Tube fares.

In an effort to get all cash off London's buses by 2006, commuters using Oyster travel cards will pay 80p - 40p less than the cash fare.