Ken Livingstone's architecture and urbanism unit is to be merged with the London Development Agency's (LDA's) design team.
The new organisation, called Design for London, will also be required to work closely with Transport for London's urban-design staff and the Olympic Delivery Authority, it was announced this morning.
These wholesale changes will include the appointment of a new director of design for London, a position that will be recruited imminently.
There will also be a new Design for London Advisory Group, which will be chaired by the mayor's current architecture advisor Richard Rogers.
The new quango will be based with the LDA, which is about to move into Will Alsop's Palestra Building in Southwark.
Speaking at a press conference, Livingstone said: 'I want London to become a world leader in sustainable urban planning, design and architecture.
'If we are to continue to attract the world's best people and compete for more international investment, then we must adopt and promote the highest standards. Design for London will be the focus for these efforts, and I want to see it take a particular interest in addressing climate change, accessibility and regeneration.'
Also present at the press conference was Rogers. He said: `Cities are competing to be the best, and design lies at the heart of that competition.
'London is already one of the world's great architectural and design capitals.
'I am delighted to support Design for London, under the leadership of the Mayor, which will help to extend this reputation, as well as taking very practical steps to support better quality buildings and public space in London,' Rogers added. by Ed Dorrell