Single bus fares and the price of a weekly bus pass will fall in London from September.
The reduced fares will come into effect from 30 September
Single fares will drop from £1 to 90p on pay-as-you-go Oyster card and weekly bus passes will fall from £14 to £13.
Mayor Ken Livingstone said Transport for London (TfL) efficiencies enabled fares to be lowered with no cut to its transport investment programme.
In January many mainline train journey fares rose by 4.3% while the cash price of bus and tube journeys also rose.
TfL's investment in the capital's transport system increased from £1.5bn in 2005 to £2.9bn in the current financial year.
Mr Livingstone said: "This unprecedented investment programme had to be financed by fare increases in the last three years.
"I am pleased that the strength of London's economy, and efficiencies achieved by TfL, mean that fares can now be reduced with no cutback in the investment programme or financial risk to the transport budget."
Passenger watchdog London TravelWatch welcomed the price reduction, which will come into effect on 30 September.
But London TravelWatch chairman Brian Cooke said: "After the big rise in fares passengers suffered at the beginning of the year, this reduction means that off-peak fares are still 12.5% more than they were this time last year.
"We also think it is a pity that cash fares couldn't have been reduced as well.
"This means there is an even bigger differential than previously between those who use Oyster, and those who are paying with cash."