Wireless internet zone to cover City of London

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The network will span the entire Square Mile, giving its estimated 350,000 workers internet access via their laptop or mobile phone.

It will use a new "mesh" technology to transfer users automatically from base station to base station as they walk by, allowing uninterrupted web use.

Some 130 base stations will be used to cover the area when the system is turned on next week.

Users will be charged about £11 a month.

"I've used the service in a taxi driving through the City and I managed to keep talking," said Niall Murphy of The Cloud, which built the system in conjunction with the City of London.

"This is the biggest hotspot of its kind in Europe as far as we know and is unique as users keep their signal wherever they are."

There are about 2,000 conventional internet hotspots around London, covering almost all the major hotels and hundreds of coffee shops. However, they require users to log in every time. Users of the City system will have to log in only once.

Mr Murphy said: "We've been meeting a lot of the big financial institutions in the area, and we've even found the network is available in a lot of their boardrooms, so we think there will be a corporate use for it as well."

Labour MP Derek Wyatt, head of the all-party parliamentary internet group, said: "Such a large-scale project is an exciting prospect for communications in the UK, allowing people to send emails, make cheap phone calls, surf the internet, do business and even play games online, wherever they are."

The service is expected to lead to a boom in sales of internet telephones. Manufacturers such as Belkin already provide wi-fi phones that instead of connecting to a mobile phone network log on to a wireless hotspot and send calls over the internet.

There are already plans to set up wi-fi zones that would dwarf the City's - Camden, Islington and Kensington and Chelsea are also in line to be covered in their entirety.