Passengers will soon be able to use pay-as-you-go Oyster smartcards at London's mainline rail stations.
Fares are cheaper with the Oyster card than with cash
Cards are currently accepted on Tubes, buses and the Docklands Light Railway.
But Transport for London (TfL) has agreed to pay for Oyster validation equipment to be provided for all rail stations in zones one to six.
Just 60 of the 300 mainline stations in the zones accept pay-as-you-go. Work to update the stations starts this year, with the service available in 2008.
Transport Secretary Douglas Alexander was joined by London mayor Ken Livingstone to make the announcement on Wednesday.
Mr Livingstone said: "The extension of Oyster from just 60 rail stations to over 300 marks a massive step towards a fully integrated ticketing system in London, enabling passengers to move easily between rail, Tube, Docklands Light Railway, tram and bus using an Oyster card without having to buy separate tickets."
TfL has also agreed to work with the Department for Transport to ensure that all Oyster equipment is capable of accepting other smart cards.
These are currently under development for use on public transport across England by the Integrated Ticketing Smartcard Organisation.
This is a further step towards the wider introduction of smart ticketing technology outside London.
Major step forward
Mr Alexander said: "This is a major step forward in ensuring that all passengers can benefit from the improvements new technology can bring.
"It lays the foundation for a national integrated ticketing scheme that will mean more flexible, quicker and simpler tickets for all public transport passengers."
Some 11 million Oyster journeys are made on the DLR and Tube every week and 16 million on buses, according to TfL.
The cards allow a sum of money to be stored so it can be used to pay-as-you-go, or it can register weekly and monthly travel cards.
The scheme introduced in 2003 means fares are cheaper with Oyster than with cash.