Trafalgar Square erupted in celebration when it was announced that London was going to host the 2012 Olympics.
Thousands of fans, some in tears, danced and cheered as ticker-tape and balloons flew around their heads.
Kelly Holmes and Steve Cram on the stage at the front of the Square threw their arms in the air in celebration.
Fans had flocked to the Square for a two-hour party but most stayed on well into the afternoon, with many waving flags, to celebrate London's success.
Double Olympic gold medallist Holmes was overwhelmed by the verdict.
Holmes hugged fellow Olympian Cram with delight after the result was revealed and was in tears for a few minutes before speaking to BBC Sport.
"It is absolutely incredible," she said. "I know how passionate it is to be involved in the Olympics.
"It will do wonders for everybody and will change our country around so much. The fact that the whole country is behind it is such a big thing."
BBC Sport's Cram jokingly said he may be tempted to make a comeback to athletics. "I'm thinking of coming out of retirement!" he said.
"The emotion means so much if you've been a competitor for Great Britain over the years you have had to travel," he said from Trafalgar Square.
"Sport is such a big thing for this country and this gives the people the opportunity to show that - bring it on," he added.
The atmosphere in the Square after the verdict was amazing.
Mary Peters, who won Olympic gold in 1972, was in Trafalgar Square.
"Seven years will go very quickly - I come from Belfast and hopefully we'll benefit as teams can come and do pre-Games training there," she said.
"Now we're the hosts, we need people on the podium picking up medals. We want to restore the pride of being British."
Swimmer Sharron Davies said: "It means we'll play a part in Beijing with the handing over of the torch. We will be showing off Britain like never before."
BBC Sport's Saj Chowdhury, among the crowds in the Square, said: "People were stunned as a wave of cheers carried through as some appeared to hear the result before others. The mood is one of elation."
Jason Gardener was one of several Olympians celebrating in London
Olympic gold medallist Jason Gardener was delighted with the Games verdict, even though he admitted he would be too old to compete in London in 2012.
"The team have done a tremendous job and the final presentation was superb," he said, speaking in Stratford.
"I am so happy for the whole country and especially the people here.
"Now's where the real work begins. It's about investing in future generations and is the way forward for kids to be competitive and be champions in 2012."
With Gardener in Stratford were fellow athletes Abi Oyepitan and Jade Johnson, who promised to mark London's 2012 Olympics with track and field success.
Oyepitan said: "I can't believe it, I am totally shocked and I didn't think we were going to get it. I'll be here in 2012 and will hopefully win gold.
"There will be nothing more fantastic than having home crowd advantage with all your family and friends watching."
Long jumper Jade Johnson said: "There would be nothing better than winning a gold medal and then retiring."
London sport development officer Manny Lewis looked to the long-term future of Stratford in east London, after the capital was awarded the 2012 Games.
"This is a fantastic result for London," he told the BBC at an Olympic celebration in the area.
"This will make London one of the greatest places to visit and enjoy the facilities we have here.
"On top of that we can regenerate one of the poorest areas of the city," he added.