Spiralling costs, expensive housing and declining living standards are the facts of life for today's Londoner.

But whereas in the past, city dwellers could bore their country cousins with tales of higher salaries and a better quality of life, this boast no longer rings true.

It seems that every month new statistics show just how greatly the capital's residents are losing out to higher costs.

And, finally, someone is listening. London's Mayor Ken Livingstone has set up an enquiry into London weighting, the additional sum added to the pay packets of the city's key workers to make up for sky-rocketing living costs.

This review will be the first time the allowance, originally introduced to bridge the gap between house prices and salaries, has been looked at in 28 years.

And with a recent Corporation of London report revealing that the city's property prices are 56 per cent higher than the national average, a review is certainly in order.

At the moment, nurses in inner London receive £2,365 annually in London weighting, which heavily contrasts with those working in outer London who only receive £1,684. Teachers in inner London receive £3,000 in London weighting whereas those in outer London receive £1,975.

Chairman of the independent panel recruited by the GLA to review the allowance, Bill Knight, said: "Many people say they can no longer afford to live in the capital and this is a big problem affecting recruitment and retention of staff in some areas of London.

"After a 28-year wait, a re-examination of how the London premium should be worked out is long overdue."

The review panel will include representatives from the public and private sectors, trade union bosses and academics. Their objective is to consider how best to compensate for the extra burden that living in London has become in contrast to a city such as Nottingham.

The Corporation of London report highlighted this burden. Its study showed that while London workers are estimated to earn an extra £119 per week than the national average, the higher price of food, estimated to be 11 per cent more, excessive fuel tax and shopping bills, as well as the difference in house prices, leave Londoners a mere £29 a week better off.

Judith Mayhew, chairwoman of the policy and resources committee at the Corporation of London's economic development unit, said: "This research explodes the myth that Londoners are significantly better off than people outside the capital. Although London salaries are much higher than elsewhere in the country, most of the advantage is eaten by the larger tax bills, higher prices and much more expensive housing costs.

"To a large extent, London's streets are paved with fool's gold."