Under proposals to be outlined this week, the new post will be decided under the alternative vote (AV) system, in which voters list candidates in order of preference.
Use of the system, which is favoured by Peter Mandelson, the Minister without Portfolio, for the Commons, will be a boost to the Liberal Democrats who have long campaigned for electoral reform.
Last week their case was given another fillip when the Prime Minister announced that they would be given places on a Cabinet consultative committee discussing constitutional issues including electoral reform.
Although it is not the Liberal Democrats' preferred electoral system, AV is regarded by the party as an improvement on first-past-the-post. But, in an elaborate compromise, the new Greater London Assembly, which will be made up of fewer than 32 members, will be conducted on a first- past-the-post basis.
Under AV, if no candidate gets more than 50 per cent of the vote, the second preferences of the last candidate are redistributed.
John Prescott, the Deputy Prime Minister, who has overall control of the London proposals, initially favoured first-past-the-post for all elections.
However, he was persuaded by the argument that many candidates could run in the mayoral elections, thereby splitting the vote. That could have meant the winner taking less than one-fifth of Londoners' votes.
Ministers want to create a new package for London local government with a strong mayor complemented by an assembly which will have to ratify the mayor's proposals.
The plans will be voted on in a London referendum on local election day, 7 May, next year. But ministers will propose just one question, seeking approval for the complete package.
That will be a blow to the Conservatives who, 10 days ago, changed policy to back the mayor but oppose the assembly.
The mayor is expected to be able to set budgets in areas such as transport and the environment, and make appointments to the most important public- service jobs in the capital. Those would include positions controlling public transport and tourism.
The Green Paper, which will be launched on Tuesday, may also suggest possible revenue-raising powers for the mayor including the idea of green taxes in the capital. Those would be likely to include road-pricing schemes which would charge motorists for use of their cars in London and channel the money back into public transport.
The Liberal Democrats were also in line for another potential boost with Lord Jenkins of Hillhead, the party's leader in the Lords, mentioned as a possible chairman of the Government's commission on electoral reform.
In its manifesto, Labour promised a referendum on changes to the Westminster voting system, and a commission will review the case for proposed new systems.
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