Last year's celebrations drew 150,000 people
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The sky over London will be lit up by a fireworks display on the South Bank to celebrate the start of 2006.
The New Year's Eve show will be produced by Jack Morton Worldwide who staged opening and closing ceremonies for the Athens 2004 Olympic Games.
Tubes will run throughout the night on New Year's Eve and will be free between 2345 GMT and 0430GMT.
Meanwhile, London's congestion charge will be suspended from Christmas Eve to 2 January.
London Mayor Ken Livingstone said: "Visitors will flock from all over the world to bring in the New Year.
"We will help make it a wonderful evening by providing free all-night transport and a spectacular display to mark the start of the New Year."
Last year, more than 150,000 people visited central London to watch a £1m fireworks display, despite celebrations being toned down in the aftermath of the Asian tsunami.