Almost 45 years after Tony Elliott launched Time Out, charging a shilling an issue, the grandaddy of listings magazines is set to be reborn as a free title in London with hundreds of thousands copies handed out each week.

Time Out's flagship London edition, which has a circulation of 55,000 and costs £3.25, is set to join the growing ranks of free titles in the autumn as part of a three-year plan to reinvigorate the magazine.

The title, which began life in 1968 with a print run of 5,000, will boost circulation to 300,000 in the hopes of increasing the amount charged for advertising space to counter the loss of cover-price revenues.

The move highlights the changing nature of the publishing business, with most paid-for newspapers and magazines seeing circulation fall as readers look online for free news, reviews and listings information.

Some publishers are responding with free titles of their own. The men's title Shortlist and women's counterpart Stylist, both distributed free in London and other big UK cities, have been two of the most successful consumer magazine launches of recent years. The London Evening Standard also made a successful switch from paid-for to free distribution nearly three years ago.

Tim Arthur, editor-in-chief of Time Out UK, said becoming free in London was not prompted by ailing sales and that the title was profitable.

He also denied that the decision has been forced on the magazine by Oakley Capital, the private equity firm run by Peter Dubens that bought 50% of the business from Elliott in 2010.

The deal was reported at the time to have valued the title at £20m, including £10m debt.

"This is not driven by private equity, it is something that has been looked at over a good amount of years on and off," said Arthur. "It is still a profitable magazine, this has not been driven by decline, it is driven by opportunity. As a magazine it was the next thing to look at really, and now feels like the right time."

At its peak in the mid-1990s Time Out sold more than 110,000 copies, double the most recent official circulation figures for the six months to the end of December.

A high proportion of the magazine's circulation is made up of subscriptions – about 32,000 – with only about 10,000-12,000 copies sold on newsstands for the full cover price, with the remainder given away for free as bulks. Time Out will continue to charge subscribers a small fee to cover postage.

More than half of the 300,000 free copies will be handed out by a team of 200 distributors spread across central London's underground and mainline rail stations.

A significant number will also be available at cultural venues, such as Tate Modern, and in coffee shops, although talks could secure distribution deals.

There are versions of Time Out in 37 cities, although all but three are licensed to third parties. Time Out will not be making free the other two that it owns directly, including the one for Paris.

Time Out's publication day will remain Tuesday. Stylist is distributed on a Wednesday, Shortlist on a Thursday and Sport on Friday.

Time Out has had to convince media-buying agencies to buy into an increase in advertising rates to try to make up for the loss of cover-price revenue.

Greg Miall, the former Sport magazine executive who is project director on the Time Out relaunch, said the loss of the cover-price revenues was not as severe as it might seem.

"We have a large base of advertising already in the magazine," he said. "In the past, as the circulation has declined, advertisers have kept it on their schedule but they do want reach."

He said that a Time Out average issue had 124 pages – although the relaunched magazine will be slimmer – with a 70/30 split of editorial pages to advertising. The new-look title is likely to be more 60/40 editorial to advertising pages.

He added that taking the magazine free suited the multi-platform business model, which included free iPad, iPhone and Android apps, as well as a website.