President Chávez’s “21st century socialism” reached London yesterday when Venezuela signed an agreement to subsidise the fuel bill for the capital’s buses by up to $32m a year to fund cheap travel for the poor.

Ken Livingstone, London’s mayor, said the 20 per cent discount would fund half-price rates on buses or trams for 250,000 Londoners who receive income support. “This arises on the suggestion of President Hugo Chávez and builds on the work his government is doing around the world in tackling the problems of poverty,” he said.

In return, the controversial Labour mayor will in April dispatch his transport chief, Peter Hendy, to set up an office in Caracas, where British officials will impart to the Venezuelan capital London’s expertise in traffic management and urban planning.

The scheme, which will run from July, will see Petróleos de Venezuela, or PDVSA, the state-owned oil company, pay cash to Transport for London, which will reimburse private bus operators for the discounted fares.