London Underground is ready to launch a system which allows people to pay for train journeys using their mobile phones. Officials from Transport for London, mobile maker Nokia and phone network O2 are understood to be preparing final details of a handset with a built-in Oyster card.

It is believed that the scheme will allow tube travellers to pay for their journeys simply by swiping a compatible mobile phone across the ticket-reading machine. The system could also be used for bus journeys, trams and some overland train journeys around the capital.

The launch would mark a significant expansion of the Oyster card scheme already used by London Underground, which allows travellers to pay for all their journeys using a single swipe card.

That project has recently been expanded to incorporate new technologies such as the Visa PayWave card, which combines a credit card, Oyster card and “contactless” payment system which can be used to authorise small purchases at some retailers.

Nokia’s contactless system is likely to use a microchip inside the phone, which activates whenever it is passed over an Oyster card reader. The price of the journey would be deducted from a top-up account or added to the traveller’s monthly phone bill. The scheme could pave the way for mobiles to be used as payment on other forms of transport elsewhere in Britain.

Some countries have been using radio frequency identification – the technology behind the Oyster system – for some years. Chips are embedded in about 50% of all phones sold in Japan.