Monday, August 25, 2008 - 12:28 AM

Around 40,000 people including record-breaking swimmer Michael Phelps have gathered to celebrate 2012 host London taking over from Beijing as the Olympic city.

The spectators watched the Olympics closing ceremony in Beijing on giant TV screens set up on the Mall near Buckingham Palace, the official residence of Queen Elizabeth II, before enjoying a pop concert.

The crowd roared their approval when the big screens showed the Mayor of London Boris Johnson taking possession of the Olympic flag during the ceremony in Beijing.

The cheers grew even louder in London when, thousands of miles away in the Chinese capital, England football star David Beckham kicked a football from the roof of a red London double-decker bus.

The "Party Like It's 2012" event in London, which took place in bright sunshine after the morning rain cleared away, also featured a fly-past by the Red Arrows, the British Royal Air Force's aerobatics team.

Their jets also swooped over the British capital on the day in July 2005 when London was awarded the 2012 Games.

The star attraction at the party was Phelps, the 23-year-old from the United States, who won eight gold medals in the pool, the highest number ever by one competitor at an Olympics.

He promised that he would be back in Britain in 2012 in search of more gold.

"I still have things that I want to do in the sport, I've never competed over here in London and I'm looking forward to really experience more of the city and be able to prepare myself to hopefully swim some fast times," he said.

Olympic handover parties took place in other British cities, including the central English city of Birmingham, which will host some of the Olympic football matches.

The British team's success at the Beijing Olympics, where it won 19 gold medals and finished fourth in the overall table, has taken many by surprise and some commentators say it could help dissipate some of the cynicism about how much the London Games will cost.

The original budget was 3.4 billion pounds ($7.3 billion) but has already risen to 9.3 billion pounds ($19.9 billion).

Even the Queen has been caught up by Olympic fever - she said she had been following Team GB's successes "with great interest and admiration".

"As a nation, we now look forward to holding the Olympic Games in London in 2012," the monarch said in a statement.

"The golden triumphs of the present British team can only serve as further inspiration to those who will be working hard over the next four years to make the London games a shining example of Olympic success."

Organisers say the London Olympics will not try and emulate the scale of the Beijing extravaganza but aim to be a "sustainable" Games which leave a lasting legacy for the deprived area of east London where they will be based.