The new stretch of railway from Surrey Quays to Clapham Junction will complete the missing link to an oribital overground railway around the capital.

Although most of the extension will run along existing National Rail lines, construction work has just begun on a new stretch of track to link London Overground services at Surrey Quays with the existing railway at Old Kent Road.

The works include building a new 1.3km railway link with associated signalling, telecommunications and power supply.

At Clapham Junction in South London a new bay platform will be built from the existing platform 2 to cope with the new service.

The Mayor of London, Boris Johnson, said: “This small but incredibly significant stretch of track will be the final section of a mighty wheel of Overground services around the capital.

“The improvements it will bring are precisely why I made a strong case to Government for the extra funding needed to make this project a reality.

Mark Hearne, head of Birse Metro, said “Birse Metro is happy to continue working with Transport for London following the recent successful delivery of the extension to Highbury & Islington.

“With the support of Balfour Beatty Rail and working in close partnership with Transport for London we will help to deliver the project within the tight time-scales and budget to improve this key transport link for those living and working within this area of south London.”

The contract award follows the opening of a link between Dalston Junction station at the northern end of London Overground’s east London route with Highbury & Islington station on London Overground’s Richmond to Stratford line.