Telewest, which already owns the other 50%, has agreed to pay £428m for the remaining half.

Last month, Telewest failed in a bid to buy Cable & Wireless Communications' residential cable assets, which were bought by NTL for £8.2bn.

Cable London's franchise covers 440,000 homes, mainly in north London.

The deal is costing Telewest £2,200 per home, in contrast to the £1,400 a home NTL paid to buy Cable & Wireless's residential assets.

Digital future

Despite this, Telewest insisted they had got a good price.

The company said it chose to buy out NTL's stake because it considered London to be a crucial market for the launch of new digital services, including high-speed Internet access.

Telewest's group finance director, Charles Burdick, said he felt Cable London had been undervalued.

Under the terms of an earlier agreement, Telewest had the right to buy out NTL's half stake at a price fixed by NTL - or sell its own share to NTL at that price.

Mr Burdick said that NTL had been prepared to buy Telewest's Cable London stake at the same price.

Telewest will issue new shares to its current shareholders to finance the deal.