The parties will pile on from early June, when Britain celebrates Queen Elizabeth II's Diamond Jubilee with spectacular pageants and a flotilla of hundreds of boats parading on the Thames.
As for watching the sporting events themselves, London offers several ways to take part on the cheap. The Olympic marathons, which take place in early August, and road cycling races do not require a ticket and can be watched in the streets for free - provided you arrive early to find a good vantage point. Both begin and finish on The Mall, near Buckingham Palace, a spectacular backdrop that's sure to attract thousands of spectators.
Trafalgar Square, Hyde Park and Victoria Park are the other key spots to find lively crowds to watch the games with. Big screens will be set up with live coverage of all medal events, and live music and other entertainment will be provided for free as well.
One way to set foot in an Olympic venue without a ticket - and even burn some calories - is to visit the Lee Valley White Water Centre, which is open for the public to canoe and raft in until April and then again after the games.
The structure, located about 19 kilometres north of the Olympic Park, will host the canoe slalom events during the games, but visitors are welcome to ride the Olympic-standard rapids before the athletes arrive to battle for gold.
Be warned that it's not exactly a budget option, though - tickets to a session of rafting costs £49 (NZ$94).
If that sounds too extreme, or if you fancy a break from all that adrenaline, tourism officials have planned dozens of free arts and culture events to coincide with the Olympics.
The London 2012 Festival - the official arts festival complementing the games - has music, plays and carnivals galore - and it promises to let 10 million people attend events for free.
One of the highlights of the festival, which opens on June 21, is the River of Music on July 21-22. It's a weekend of free music performances representing all 205 participating Olympic nations at iconic landmarks along the Thames. Expect to see the Americas represented at the Tower of London, and musicians from Asia taking the stage at Battersea Park.
The other major arts event of the year is the World Shakespeare Festival, which begins on the Bard's birthday, April 23. Its large programme features a major exhibition at the British Museum and productions by companies from Brazil to Russia, including an interpretation of Romeo and Juliet set in contemporary Iraq. The productions will be shown across the UK, and some of the tickets are priced at as low as £3 (NZ$5.80).
Special programmes aside, visitors on a budget who want to make the most out of their trip to London should consider the many free arts and cultural offerings regularly available in the city.
Most of London's top museums have free permanent collections to suit all interests, while many historic churches around London organise free lunchtime concerts on a weekly basis - try St Martin-in-the-Fields, next to the National Gallery in Trafalgar Square.
The city's two best-known churches - St Paul's Cathedral and Westminster Abbey - don't offer free concerts, but they both welcome visitors to their evensong services. Visiting to worship is free of charge (though donations are welcome), and is an economical way to admire the architecture inside these majestic buildings. Most churches post concert and service schedules on their websites.
West End musicals and plays are generally not cheap, but there are ways to scrimp. The Royal Opera House and some theatres sometimes have standing tickets in the gallery that cost as little as £5 (NZ$9.60), while most venues also release returned tickets for a steal to people willing to line up just before shows start. Simply visit theatres early on the day of the show and ask about last-minute options.
Rather be outdoors? London is a fine walking city, and visitors often don't realise how easy it is to skip the bus or the Underground and simply walk from one attraction to the next.
Don't miss taking in the south bank of the Thames, which is always bustling with activity in the summer. One of the best ways to enjoy it is to start at the riverside Tate Modern, an art museum housed in an iconic power station.
From there, either walk east along the river towards Tower Bridge, or west towards the National Theatre, which hosts a series of free circus, music and other arts events on its grounds every summer. Both walks are suitable for families and take under 30 minutes.
Finally, there will probably come a point in your trip when you yearn for a moment of quiet away from all the activity. To escape the madding crowd (and save on eating out), pack a picnic and enjoy London's superb green spaces.
Buy lunch at supermarkets or Borough Market, the city's biggest food market, and head to one of London's many centrally located parks.
Relax amid the rose gardens, picturesque ponds and manicured gardens of Regent's Park, or venture a little farther out - about half an hour by tube - to north London's vast Hampstead Heath for longer walks, kite-flying or even outdoor swimming in its ponds.
Once at the heath, hike up a gentle slope up to Parliament Hill for a breathtaking view of the entire city. It's possibly the best vantage point for London - and there are no lines or entrance fees.
BUT WHERE WILL I SLEEP?
Can't afford to stay in a fancy hotel during the 2012 London Olympic Games? Here are four cheap alternatives.
1. Sleep with the trees
Camping in strangers' gardens is the latest accommodation idea out of Britain. Camp in My Garden offers travellers the chance to pitch their tent in backyards and orchards from London to Cornwall for between NZ$13 and NZ$32 per person per night. Some of the owners will throw in a BBQ dinner and do your laundry.
2. A little bit of India in London
It may be lacking in frills but it's cheap, centrally located and the curries are delicious. The YMCA Indian Student Hostel has rooms for solo travellers, couples and large families. Indian breakfast and dinner are included in the tariff so you'll have plenty of pennies left for lunch. As a female staying here alone I felt safe and welcome. From NZ$38 per person in a four-bed dorm to NZ$173 for a deluxe double room. Children under five stay free.
3. One for the girls
St-Christopher's female only hostel, The Oasis, is a quiet, relaxed place to stay while still in the hustle and bustle of central London. From the hostel you can walk to the River Thames, Tower Bridge, the Tower of London, the Tate Modern Gallery and Shakespeare's Globe Theatre. There are two-bed rooms up to eight-bed dorms and fluffy towels and basic toiletries are provided. From NZ$49 per night.
4. Stay in a stranger's bed
Many websites, such as Gumtree London, Rent At The Games or Rent 2012, list flats, homes or apartments available during the London Olympic Games. Rent at the Games, for instance, has 315 properties listed, from a two-bed dockside apartment to a four bedroom Victorian house.
- AAP
