Everyone knew the final decision would be close. And when the official announcement from the International Olympic Committee came out from Singapore, Londoners exploded with exuberance.

Crowds in London's Trafalgar Square react to announcement by IOC in Singapore that London won bid to host 2012 Olympic Games

Some 10,000 people crammed into London's Trafalgar Square for the important decision. All eyes were focused on a giant screen there as IOC President Jacques Rogge made the historic announcement. They stood in stony silence until he uttered the single word they were waiting to hear, "London."

The spontaneous reaction was one of joy and excitement.

Among those in the square, was British Olympic double Gold medallist, Kelly Holmes, who spoke on British television.

"It is absolutely amazing," she said. "I mean, really the feeling of it because the Olympic spirit is so passionate, you know. And I think the country is just going to do wonders for everybody and especially like the youth and them. I just think it is going to change our country around so much."

After two days of final persuasion in Singapore, Prime Minister Tony Blair had just flown to Scotland where he will host the Group of Eight summit at Gleneagles. There, he underlined his joy that the British bid had been successful.

"We have got a great chance now to develop sport in our country, to have a fantastic Olympic games and then to leave a legacy for the future," he said.

A big part of that legacy will be the revitalization of the economically depressed east part of London.

It will mean jobs for many, increased business opportunities and a transformed landscape long after the games are over.

Winning the bid took two years, seven more tough years lie ahead, as London works to get every last detail right for the 2012 games.

Londoners react in Trafalgar Square, to announcement that London won bid to host 2012 Olympic Games

That hard work will start almost immediately, but for right now, the British capital is pausing to celebrate. The games are returning here for the first time since 1948 and Londoners are in a party mood.