Three-car trains will be introduced on the Docklands Light Railway, increasing capacity by 50% prior to the London 2012 Olympics.
Platforms will be lengthened for the longer trains
Transport for London (TfL) said the new trains would run on the busiest parts of the east London route by 2010.
This comes after plans to lengthen platforms, strengthen viaducts and upgrade railway infrastructure were approved last summer.
The first three-car services will run from Bank to Lewisham in 2009.
Current two-car trains have a capacity for 360 people - the longer three-car trains will provide transport for 540 commuters.
Both the Woolwich Arsenal extension, which will open in 2009, and Stratford International extension, set to open in 2010, have been designed to operate three-car trains.
Mayor of London Ken Livingstone said: "This will boost the local economy and help deliver our transport plans for the 2012 Olympic Games."
DLR Director Jonathan Fox said: "This decision is great news for our passengers because the Docklands Light Railway is now in a position to keep pace with its ever-increasing demand.
"It's a growing railway, bringing business, jobs and regeneration to all the areas it serves."