Three Australian cities are now rated as more expensive than London for expatriates, with the strong dollar and steep rents blamed for the high cost of living.

Sydney, Melbourne and Perth now rank as among the world's 20 most expensive cities, while the British capital dropped to 25th spot, according to the 2012 Mercer Worldwide Cost of Living Survey.

Sydney and other Australian cities are becoming more costly for expatriates. Credit:James Morgan

All lagged behind Tokyo, Japan, and Luanda, the capital of oil-rich Angola, while Japan's Osaka and Russia's Moscow rounded out the four most costly cities.