The funding will be used to purchase items from the London 2012 "Look Book," a catalogue of materials which will be published later this summer and feature the official colours and branding of the Games, although any surplus funding can alternatively be used to purchase artistic content from the London Outdoor Arts Festival.

Flags, banners and bunting are set to feature heavily while Boroughs will be encouraged to submit their own proposals for how their area might look, giving them the flexibility to decide how the iconic designs will be used to best display hidden aspects of London.

"The Games are a unique opportunity for London to secure its position for another generation as the best big city in the world," said Johnson.

"We all have a duty to make the most of this opportunity and I'm determined to ensure every part of the capital gets to benefit and enjoy the Games.

"This fund will help us put on the best show and showcase ourselves to the world - wherever we are."

This is the first part of a major programme that will also see London's iconic landmarks and popular tourist venues spectacularly dressed to welcome the world to London in 2012.

London Boroughs must identify areas to dress by the end of July 2011 following consultation with Greater London Authority (GLA) and London 2012 and confirm their plans by the end of this September.

The GLA and London 2012 will then approve Borough plans by the end of November and all orders from the Look Book must be received by the end of the year.

"Next year will be an incredible year for London and the rest of the UK as the nation comes together to celebrate the Games," said Sebastian Coe, the chairman of London 2012. 

"We share the Mayors excitement and vision for one look, ensuring every resident and visitor is able feel part of the London 2012 Olympic and Paralympic Games.

"We look forward to working together with the London Boroughs to make this the greatest show on earth."

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