Metro is already widely read by Tube commuters

The London Business Daily will compete with the Financial Times and will be distributed on the city's transport network, its editors have confirmed.

It is the brainchild of Lawson Muncaster a former boss of a Swedish newspaper publisher.

Associated Newspapers Ltd, publisher of the free Metro newspaper, gave up an exclusive distribution deal with Transport for London in April.

The Office of Fair Trading ruled that the deal prevented other publishers distributing their newspapers on the Tube.

The new paper will be edited by David Parsley, a former Sunday Express business editor, and an editorial team is being recruited.

Mr Muncaster said he felt the needs of London's business community were not being fully met.

He added: "By launching London Business Daily at the end of this year, we aim to fill this gap in the market."

Initial funding has been secured, but the company is now negotiating "second-round funding" with venture capital firms.

London mayor Ken Livingstone has been calling for the creation of a free afternoon paper.

Associated Newspapers, which publishes the Metro, recently launched Standard Lite, a free slimline edition of the Evening Standard distributed at lunchtime.