A record 16.1m overseas tourists visited London
The tourism industry in London is predicted to face its "toughest year since 2005", the city's tourist board Visit London has said.
Fewer tourists are expected to visit the city in 2008 due to the credit crunch and "faltering economic growth".
A record number of 16.1m overseas visitors flocked to London in 2007 and added £8.7bn to the city's economy.
But domestic tourism bucked this trend by dropping to 10.1m visitors - a fall of 7.5% compared to 2006.
In its projections for 2008, Visit London said total visitors to London were expected to decrease by 1% and spending was "unlikely to grow much above inflation".
It warned that the tourism slowdown could be "more severe than predicted".
Attributing the trend to worldwide economic slowdown and "weakening consumer spending in Europe and North America", it said London's global share in international tourism had fallen from 1.85% in 2006 to 1.78% in 2007.
Visitors from Asia
Provisional results from the Office of National Statistics show 2007 was a good year for overseas tourists with figures rising by 3% compared to 2006.
The number of tourists from the US fell to 2.5m, a drop of 5.3% but visitors from Europe went up by 2.7% and tourists from Australia saw a 20% rise.
Chinese and Indian visitors to London also rose since 2006 with 89,000 Chinese visitors, up 37%, and 237,000 Indians, a rise of 3% in 2007.
Indians also outspent the Japanese tourists - £171m compared to £149m.
The year-on-year fall in domestic tourists was attributed to budget fares to Europe.
Visit London chief executive James Bidwell said: "Since their peak in 2000, domestic overnight visits have fallen 30 per cent across Britain.
"This is primarily due to the growth of cheap, short haul carriers and expanding regional airports across Europe."