London has been victorious in its bid to host the 2012 Olympic Games. 

After years of speculation, International Olympic Committee (IOC) inspections and event planning, the UK Capital was declared the winner at a ceremony in Singapore this afternoon.

In the initial rounds of voting Moscow, New York and Madrid were eliminated from the five-city contest leaving London and Paris to secure victory by winning more than 50% of IOC members' votes.

Following the final stage of the process, IOC president Jacques Rogge announced to the waiting world that London will be the home of the world's biggest sporting event in seven years time.

It received 54 votes compared to Paris' 50.

Speaking to reporters culture secretary Tessa Jowell said "It will transform London and sport in our country."

As the result was declared, thousands of revellers gathered in Trafalgar Square including Dame Kelly Holmes, double gold winner at last year's Athens Olympics, erupted in celebration.

"It will change the face of sport in our country. It's absolutely fantastic. I think it will change everything. Everyone will want to be part of the Olympic spirit," Holmes said.

Former Olympian Steve Gram, who was also present in the Square, added: "Everybody will now look forward to 2012 with huge anticipation. Seb Coe - what a man!"

Throughout the campaign, Paris was favourite to win the event. However, after Sebastian Coe had replaced entrepreneur Barbara Cassani as bid leader, London began to make significant gains on closing the gap.

In the early days of the process, the IOC expressed concerns over elements of London's plans particularly the city's transport network. In its final evaluation report, however, it was praised for its 'high quality' bid.

The main focus of the London Games will be the Olympic Park in Stratford. The area of east London is currently one of the most deprived in the UK and the event will bring must needed regeneration.

Yesterday, prime minister Tony Blair promised work would begin on planning the Games within 48 hours of London winning the contest.

Mary Reilly, chair of the London Development Agency, said: "Today's news represents an incredible opportunity for London and the UK business community as a whole. In addition to the creation of thousands of jobs and new homes, the Games will bring a raft of business opportunities for British companies.

"From construction to hospitality, industries across the country will reap the benefits of the capital's successful bid."