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An extra 540 buses will be on the streets of London by the end of the decade as part of a £500 million investment plan announced today to cope with soaring demand.

Services will be boosted to carry an extra 2.9 million passengers a week on the fleet of 7,500 vehicles.

Buses already carry 2.4 billion passengers a year, but many routes are overcrowded at peak times.

The extra buses will serve shifting populations in Bexley and Newham, as well as hotspots for growth, such as Elephant and Castle and the 11,000-home Barking Riverside development, which is expected to be given the go-ahead by Chancellor George Osborne in tomorrow’s Autumn Statement.

There will be more frequent services and some single-deckers will be switched to double.

Changes will be financed in part from fares at a time of record ridership.

Deputy mayor for transport Isabel Dedring said: “We are giving similar attention to buses as we have to the Tube. In recent years there has been a rise in ridership but no major increase in the total number of buses.

“It is important to ensure the growth is focused in the right areas, such as Newham and Bexley, where there is a lot of change in where people are living and working.”

Ms Dedring said the capacity increase was in addition to an ongoing review of routes, such as altering the network because of Crossrail and changing night buses after the introduction next September of the weekend Night Tube.

New bus lanes, longer hours for bus lanes, and priority turns will be added under a £200 million “bus priority scheme”. The spending proposals are included in Transport for London’s business plan, covering spending until 2021, which is subject to approval by the board tomorrow.

It includes a £30 million plan to increase the capacity of London Tramlink on the existing Wimbledon to Croydon line by 50 per cent, and provide funds for an extension to Crystal Palace or Sutton, with businesses and local authorities also contributing.

Boris Johnson said: “London buses carry more than 2.4 billion passengers a year — twice as many as the Tube.

“They are the backbone and workhorses of our transport network, playing an undeniably important role in London’s economy.

“This major new investment in our bus services will help meet the demand of the city’s rapidly growing population. It will also support regeneration of key growth areas.”

Caroline Pidgeon, leader of the Liberal Democrat London Assembly Group, said: “While today’s announcement of 500 extra buses is a step in the right direction, I fear the current plans will not keep up with the increased demand across the capital.”