The construction project - part of a £300 million, 30-year design, build and maintain partnership between DLR Ltd and the CARE consortium (AMEC and the Royal Bank of Scotland) - is due for completion by late 2005.

Speaking at the groundbreaking ceremony on the site of the new Pontoon Dock station at Barrier Park, East London, Mr Kiley said:

"I am delighted to be here today to see work starting on the next phase of DLR's expansion. The DLR is an important part of our network and this expansion to City Airport and North Woolwich is excellent news, not only for the people who live and work in East London but for London as a whole.

"The Mayor and Transport for London are committed to providing fast, reliable and safe transport to meet the future growth of the Capital. Last year, Transport for London invested more than £40m in the railway's future, buying 24 new trains. This investment, and the new extension, will mean continuing success for the DLR."

Welcoming the start of work, Ken Livingstone, London's Mayor said:

"The DLR is at the heart of my plans to regenerate and revitalise Docklands and East London. This extension, the first of several planned for the years ahead, means more people will have access to reliable, affordable transport. This means more jobs and prosperity for the area."

Ian Brown, Managing Director of London Rail, said:

"The rapid development of the railway was backed by substantial financial support from Transport for London and the Government. This process must continue to keep pace with the regeneration of Docklands and east and south-east London. DLR is now carrying 44 million passengers a year - compared to 8.3 million ten years ago - and this will increase to 60 million by 2005."