Schoolchildren unveiled the new part of the square

Fireworks were set off and bells rang out from the local St Martin-in-the-Field's church as he re-opened the newly-pedestrianised area in front of hundreds of people.

The �25m improvements mean the millions of visitors to the tourist attraction can walk up a staircase to the National Gallery, instead of negotiating five lanes of traffic.

Many of the capital's squares were built for people but have been taken over by traffic Ken Livingstone In Pictures: History of the square The battles of Trafalgar Square

The Greater London Authority (GLA) hopes that reducing traffic around the square will improve the experience and will make it a centre for concerts, street entertainment, children's activities and other cultural events.

The square now has toilets, an open air cafe and Mr Livingstone has promised concerts there every weekend.

He said after the opening ceremony, which included street performers, bands and choirs, "We are working on something really quite spectacular on this New Year's eve."

The traditional location for 31 December was closed in 2002 because of the construction work.

"It's better now as we don't have to dodge the buses." In pictures

The mayor inherited the improvement scheme from the government which was looking to pedestrianise Parliament Square as well.

But the changes are now likely to be used as a template for further work around London as part of the mayor's "100 Public Spaces" programme.

Mr Livingstone said: "Many of the capital's squares were built for people but have been taken over by traffic, what we want to do is return them to their original role at the heart of local communities.

"I believe that pleasant, well designed spaces make a better city, safer, more inclusive and more enjoyable."

The aim over the next five years is to spread some of the scheme's successes to 100 sites across London, such as the introduction of heritage wardens.

Their 24-hour patrols have seen crime in the around the square fall and has been copied in places like Piccadilly Circus and Leicester Square.

The final battle for the mayor is to have a statue of the Nelson Mandela on the new North Terrace.

But he will have to overcome critics in the arts world who say the nine feet bronze being planned by sculptor Ian Walters will not fit in with the surroundings.