Welcome to Libreville, the capital of Gabon where the cost of living is as high as London

LONDON HAS climbed into the top 10 of the world's most expensive cities - where it has joined Libreville, the capital of Gabon, in joint sixth position.

The West African city, where the privileged lead a life of luxury financed by Gabon's huge oil reserves, is no stranger to such a lofty position.

London, however, because of the high value of the sterling, has shot up from 14th position to its highest spot for 20 years, according to a survey carried out by the Economist Intelligence Unit (EIU).

The escalating cost of food, drink, entertainment and public transport is also to blame for the elevated ranking of England's capital.

The cost of living in London now compares unfavourably to most other European cities where costs have stayed roughly the same in the past few months - making the capital now more expensive than Paris.

Gabon, an oil-producing country with a wealthy elite, was once the administrative centre of the French colonies in West Africa. Though many people have never heard of Libreville, its ranking as one of the world's most expensive cities is nothing new.

Virginia Thorp, editor of the EIU's Worldwide Cost of Living Survey, said: "Expatriates who are mostly there because of the oil industry are a small, captive market. Quality goods have to be imported and the prices are inflated. Libreville has always been one of the most expensive cities."

Ms Thorp added: "I think that London has probably peaked and we may well look back at this as the highest ranking it has achieved."

The survey, which is based on the views of expatriates who move around cities and countries as part of their jobs, covers 119 cities. Representatives in each of the cities fill out a questionnaire in two set weeks of the year, detailing the cost of goods such as alcohol, tobacco, household items, clothing and books. Transport, recreation and "personal care costs" are also compared.

The Japanese cities of Tokyo and Osaka are the most expensive places to live in, closely followed by Hong Kong in third place. The Norwegian capital, Oslo, remains the most expensive city in Europe.

Most Western European cities are in the top half of the rankings, making Eastern Europe a better bet for holidaymakers as a cheap destination.

Lisbon is the cheapest city in western Europe and Budapest the least costly in Europe as a whole. The Asian financial crisis has resulted in Jakarta plummeting 60 places to 119th.