The new government will abolish the Government Office for London, it was announced today.
The agreement forms part of the new coalition agreement also promising to freeze council tax "support Crossrail" and clamp down on aggressive council newspapers.
The GOL was set up before the formation of the Greater London Authority and has long been something of an anomaly.
All parties on the London Assembly agreed a motion calling for it to be scrapped last year.
Leader of the Liberal Democrat group on the Assembly Caroline Pidgeon said today:
"The Government office for London has been on borrowed time ever since the creation of the Mayor and London Assembly in 2000. It is a superfluous bureaucracy which we can all do without.”“This is the first step to avoiding duplication of activity, saving money and improving accountability in London's governance."
It is not yet known where the powers of GOL will be devolved to and what projects will lose out from the decision.
It is also not known what new powers the Mayor will be given or whether he will still be called to speak to commons select committees, as he famously was last year.
However, the Mayor yesterday called on the new Deputy Prime Minister Nick Clegg to be called to the London Assembly instead.
The coalition agreement also pledges to "support Crossrail." However there is still no firm commitment to complete the line.
At yesterday's Mayor's Question Time, Boris raised fears that the coalition may attempt to amputate or delay either of the branch lines.
He told the Assembly that there was still a lot of "ignorance" in government about the benefits of the project and pledged to mount a "Stalingrad-like defense" of it in the months to come.
The coalition have pledged to scrap the planned third runway at Heathrow and to oppose expansion at Stansted and Gatwick.
However, there are no mentions of other airports in the deal, suggesting that further expansion in the South East is still a strong possibility.
The new government has pledged to "impose tougher rules to stop unfair competition by local authority newspapers."
This could impact on councils such as Greenwich and Hammersmith and Fulham which produce newspapers that actively compete with local independents.
The coalition has also pledged to freeze council tax across the country for one year and possibly beyond.
With money tight this could mean an increase in regressive charges for "non-essential" services, as seen in Barnet and elsewhere.