London is experiencing an increased level of job creation as a new breed of entrepreneurs sets up its own firms, according to figures released by a business consortium.

The London Enterprise Agency (Lenta) has described small businesses as 'probably the only generator of new jobs in the London region'. It estimates that, for the first time since 1990, the number of new firms in the capital is beginning to equal that of those failing, with each new business creating an average of 2.5 jobs.

Research obtained by the consortium shows that in the first half of the year 35,000 new businesses were established in the London area. By the end of the year the total is expected to reach between 50,000 and 70,000.

Most are founded by professionals in their thirties and forties made redundant from larger firms. A second, smaller group of new businesses is formed by design graduates going into production, and the natural splintering of existing concerns such as hairdressing or restaurants.

While some new businesses continue the founder's profession or trade, others are a complete change of direction. Madeleine Hamilton, 30, spent eight years qualifying as a corporate lawyer in England and France but felt stifled by the atmosphere of a large City firm.

Ms Hamilton decided to go into business producing high quality clothing for City women, and opened her first shop in Chancery Lane in April.

'I simply love working for myself. There is no comparison between my former life as a lawyer and now,' she said.

'The business occupies nearly 100 per cent of my time but I do not regret or resent the change. I do not think I could be employed again.'

Brian Wright, chief executive with Lenta, predicts self-employment will become increasingly common as large firms continue to streamline.

'There has been a sea change in attitudes. Careers advice used to advocate joining a big organisation and playing safe. Now people are less afraid of risk,' he said.

Lenta is organising a series of one-day courses for would-be entrepreneurs in the planning skills needed to launch and sustain a small business.

As well as individual counselling, there will be input from venture capitalists and the four main clearing banks.