But a shadow has been cast over the power he or she will have.

The BBC's Rory McLean: "Transport will be a top priority"

The Greater London Authority Bill outlines the creation of the mayor's job and an elected assembly.

Deputy Prime Minister John Prescott said several new bodies will be appointed by and accountable to the mayor.

The move could financially tie the hands of the man or woman who is elected in 2000.

Lord Archer plans to stand for mayor

Left-wing Labour MP Ken Livingstone and novelist and Conservative party member Lord Archer have already made plain their intention to stand.

Launching the bill, Mr Prescott promised the new legislation would create a "world class government for a world class city".

He described it as a "historic day for London and Londoners".

He said: "I am delighted to publish the bill which will restore democratic and accountable leadership to our capital."

London's mayors until now have had purely ceremonial powers

Mr Prescott said the bill was part of the government's programme of decentralising government which included establishing regional assemblies in Scotland, Wales and Northern Ireland.

He said: "It will be a new type of authority bringing a new style of politics to our capital, inclusive, less confrontational, dealing with the issues that matter.

"It will have a directly elected mayor to provide leadership, developing strategies such as transport, the environment, culture and economic development and planning with real powers to make it happen, to make London a better place to live."

The mayor would be scrutinised by the authority that itself would offer integrated solutions and promote the city.

But Liberal Democrat Simon Hughes - also a possible candidate - warned there was a danger of raising public expectations, which may not be met, if the mayor's powers are limited.

The bill sets out plans for:

• A directly elected mayor
• A small assembly from across London
• An integrated transport body for London
• Workplace parking levies and road charges
• A police authority for the capital
• A regional development agency for London
• New voting systems
• The mayor's powers
• An annual state of London debate
• A people's question time twice a year

Mr Prescott said the bill did not stop with the mayor and the assembly. It would also create a body to tackle transport and economic development in the capital.

The London Development Agency would be business-led and would advise the mayor and implement his or her economic strategies.

John Prescott: "London will lead the world"

The Transport for London body would take over the London transport services and would implement the mayor's integrated transport strategy.

Both bodies will be appointed and led by the mayor.

The mayor and boroughs would be given powers to levy road charges and introduce taxes on company parking.

A new underground system would be created for the 21st century through a public-private finance partnership, said Mr Prescott.

Home Office Minister Paul Boateng said: "London will have its own democratically accountable police authority.

"This is the best possible basis for the partnership between the police and public which is vital to crime reduction and building a safer city."