BORIS Johnson has dumped a public relations agency owned by Rupert Murdoch's son-in-law as part of his cost-cutting drive at City Hall.

The Mayor terminated his contract with Freud Communications, which organised media campaigns and events, to save the London taxpayer £108,000 a month.

Most recently the firm, which represents the London Olympics, celebrity clients including Simon Cowell and multinational firms Pepsi and Nike, arranged Mr Johnson's trip to the Beijing Games. Dan Ritterband, the Mayor's director of marketing, has brought all the Greater London Authority's PR and events work in-house.

Freud's, run by multi-millionaire Matthew Freud, had been paid by London Unlimited, a body set up by former mayor Ken Livingstone to attract people to the capital to invest, work and study.

But Mr Johnson closed down the body in the first month of the new administration as well as cutting his own media and marketing team by about 15 per cent.

The bulk of Freud's work was focused on the GLA's emerging markets strategy and Mr Johnson could face criticism that he is neglecting key interests in Russia and China by cancelling the contract.

However, Mr Ritterband said: "This does not mean for a second that we don't value emerging markets but we're just going to be boxing a bit more cleverly about how we spend these sums. We're still interested, we're just going to find ways of doing it a bit cheaper. We no longer use external agencies for PR."

Mr Livingstone was criticised for spending tens of thousands of pounds on Freud Communications despite employing 70 staff in his own media and marketing team.

The firm was paid more than £350,000 by Mr Livingstone through the GLA and the London Development Agency.

Mr Freud is married to Elisabeth Murdoch and is close to both Mr Livingstone and Tony Blair.