Hundreds of people have been given special handsets fitted with a built-in credit card and Oyster card, the device used to pay for train and bus tickets in the capital.

When the phone is passed over a scanner in stations or shops, money is deducted from the mobile phone as payment, the trial’s organizers said.

People can spend up to 10 pounds at a time at selected shops and cafes, including Coffee Republic, Threshers and Books Etc.

Wireless transactions are common in some countries, such as Japan, where consumers already use mobiles to pay for everything from burgers to train tickets.

Organizers say that if the six-month London trial is a success the scheme could be extended to include bigger payments, more shops and concerts and plays.

Those taking part will receive 50 pounds worth of Oyster journeys, 60 pounds off their O2 phone bill and 200 pounds to spend with the in-built Barclaycard.

The companies behind the trial include Transport for London, mobile phone firm O2, Barclaycard, Visa Europe, and Nokia.

(Reporting by Peter Griffiths; Editing by Steve Addison)