Fares on the London Underground network are to rise by a quarter, Ken Livingstone has announced.

In what is seen as a big political gamble ahead of next year's mayoral elections, a single ticket in the centre of the Capital will increase from £1.60 to £2.

Ticket prices on London buses will also increase. The move follows fears that the transport budget could be facing a funding gap of £600 million by 2005/06.

Conservative mayoral candidate Steve Norris said Livingstone had created a budget "shambles".

Liberal Democrat contender Simon Hughes warned there could be more "difficult decisions" ahead.