Transport for London (TfL) has awarded a contract to Birse Metro to build the final part of the London Overground rail network that, when complete at the end of 2012, will orbit the Capital.

This further extension of the London Overground network will deliver a key rail link.

The Surrey Quays to Clapham Junction link will mean passengers can use London Overground services to make journeys around London without needing to head into the centre of the Capital.

Although most of the extension will run along existing National Rail lines, construction work has begun on a new stretch of track to link London Overground services at Surrey Quays with the existing railway at Old Kent Road.

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The Mayor of London, Boris Johnson, said: "This small but incredibly significant stretch of track will be the final section of a mighty wheel of Overground services around the Capital.

"The improvements it will bring are precisely why I made a strong case to Government for the extra funding needed to make this project a reality."

The Managing Director of TfL London Rail and London Underground, Mike Brown, said: "We are delighted that work on this important link is proceeding, particularly in this tough economic climate, as it will deliver significant benefits to south Londoners.

"This further extension of the London Overground network 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.

"It will also double the frequency of services along this line which will help meet London's increasing demand for more rail capacity."

(CD/KMcA)