London is an expensive city and it's very easy to spend a few hundred pounds per day on accommodation, meals, and a trip to the theatre. This also means that those travelling on a budget may not bother visiting London at all, because of the fear that it might eat up too high a proportion of those precious funds. That's a shame, because it's possible to 'do' London very cheaply, with so many of its world class attractions available for free.
Accommodation is almost inevitably going to take up a large part of your budget, so getting this right could make a big difference in the amount of spending money you have during the day and evenings. Personally, I'd rather be out all day than hanging around a hotel, so I just need a place to leave my stuff, shower, and sleep at the end of the evening. It doesn't have to be super-comfortable, so I tend to stay mainly in hostels that are cheap & central, just like I would when backpacking anywhere else in the world. The Generator Hostel http://www.generatorhostels.com/en/london/ is a large hostel situated near The British Museum and it attracts a young, international crowd. Last time I stayed there, I thought it needed sprucing up a little, but it has both dorms & private rooms, and has a cheap & popular bar which is an excellent place to meet people. Another one located very close to Piccadilly is the aptly named Piccadilly Backpackers http://www.piccadillyhotel.net/ . You can't beat the location. Astor Hostels has 4 different centrally located hostels to choose from, so they are also worth a try http://www.astorhostels.co.uk/. Of course, you can always try and get a bed for free in someone's home at Couchsurfers http://www.couchsurfing.org/!
There will be a lot of people out there who just turn up their nose at the idea of staying in a hostel - too many young people, little privacy, little comfort to speak of, etc. Unfortunately, a 'cheap' hotel in London doesn't exist, unless it's a flea-pit tucked behind a railway station. Your best bet is to try one of the many hotel booking sites such as http://www.lastminute.com/ (excellent prices can be had with their secret hotels deals - you don't know the name of the hotel untul you book, though!), http://www.laterooms.com, and http://www.ebookers.com. If you can handle the orange decor and tiny double beds, http://www.easyhotel.com/ is a cheap and cheerful option with half dozen hotels in London. Other budget hotels include http://www.ibishotel.com & http://www.travelodge.co.uk. One word of warning is to make absolutely sure you know where the hotel is located. London is a big place, and you could end up staying a long way out from the centre. Staying near any London airport is a big mistake unless it's the night before an early flight.
Ok, now that you've found a place to stay, you're going to want to get around. Don't even think about renting a car unless you want to spend most of your time lost or stuck in a traffic jam. Public transport is the way to go, and if you're spending a few days or more in London, it'll be a lot cheaper if you get an Oystercard - http://visitorshop.tfl.gov.uk/oystercard/product/oyster-card.html. There are special versions for tourists, and they will actually deliver it to your home country before you travel if you order it in time. Another option is a travelcard, which is available for 1 day or 1 week's worth of travel. http://visitorshop.tfl.gov.uk/travelcards/1-day/product/day-anytime-travelcard.html. Both these cards will let you use the tube & the bus system. As far as I'm aware, bus drivers can't take cash for a ticket, and single tube tickets bought without an oystercard are a massive rip-off.
The advantage of the Tube, or Underground is that it's easy to use, and pretty quick. There shouldn't be any traffic jams underground. It also gets you directly where you need to go, without you having to worry that you might miss your stop. On the flipside, some stations may require you to do a lot of walking underground to get to the correct platform, they can be very crowded at times, and you obviously miss out on a lot of sights.
Bus travel is cheaper than the tube and can be a great way to get to see the city. They also reach many parts of London that the tube doesn't extend to. Unfortunately, they also can get stuck in traffic jams, so can be slow at times. There's also a riverbus service http://www.tfl.gov.uk/modalpages/2648.aspx but dress warmly!
My favourite way of getting around the city is also the cheapest - by bike. London has a great system of cycle hire, affectionately called "Boris Bikes" as they were brought in by the mayor of London, Boris Johnson. That's him on his own bike when I bumped into him one day. The way they work is that there is a system of docking stations in central London, each holding a good number of bikes. You use your credit or debit card to pay a £1 a day usage fee (if you steal a bike, it gets charged to your card!) and then you get a printed pin number that lets you free a bike from the docking station, and then you can pedal off for up to half an hour for free. Keep the bike for longer, and you start getting charged, depending on how long you have it for, so the secret is to just swap bikes at another docking station before the 30 minutes are up. Here's where you can find more detailed information http://www.tfl.gov.uk/roadusers/cycling/14808.aspx What I like about them is that you can just ride them, leave them in a docking station, and then you don't have to worry about your bike getting stolen while you go out for a meal, or see a show.
Accommodation is almost inevitably going to take up a large part of your budget, so getting this right could make a big difference in the amount of spending money you have during the day and evenings. Personally, I'd rather be out all day than hanging around a hotel, so I just need a place to leave my stuff, shower, and sleep at the end of the evening. It doesn't have to be super-comfortable, so I tend to stay mainly in hostels that are cheap & central, just like I would when backpacking anywhere else in the world. The Generator Hostel http://www.generatorhostels.com/en/london/ is a large hostel situated near The British Museum and it attracts a young, international crowd. Last time I stayed there, I thought it needed sprucing up a little, but it has both dorms & private rooms, and has a cheap & popular bar which is an excellent place to meet people. Another one located very close to Piccadilly is the aptly named Piccadilly Backpackers http://www.piccadillyhotel.net/ . You can't beat the location. Astor Hostels has 4 different centrally located hostels to choose from, so they are also worth a try http://www.astorhostels.co.uk/. Of course, you can always try and get a bed for free in someone's home at Couchsurfers http://www.couchsurfing.org/!
There will be a lot of people out there who just turn up their nose at the idea of staying in a hostel - too many young people, little privacy, little comfort to speak of, etc. Unfortunately, a 'cheap' hotel in London doesn't exist, unless it's a flea-pit tucked behind a railway station. Your best bet is to try one of the many hotel booking sites such as http://www.lastminute.com/ (excellent prices can be had with their secret hotels deals - you don't know the name of the hotel untul you book, though!), http://www.laterooms.com, and http://www.ebookers.com. If you can handle the orange decor and tiny double beds, http://www.easyhotel.com/ is a cheap and cheerful option with half dozen hotels in London. Other budget hotels include http://www.ibishotel.com & http://www.travelodge.co.uk. One word of warning is to make absolutely sure you know where the hotel is located. London is a big place, and you could end up staying a long way out from the centre. Staying near any London airport is a big mistake unless it's the night before an early flight.
Ok, now that you've found a place to stay, you're going to want to get around. Don't even think about renting a car unless you want to spend most of your time lost or stuck in a traffic jam. Public transport is the way to go, and if you're spending a few days or more in London, it'll be a lot cheaper if you get an Oystercard - http://visitorshop.tfl.gov.uk/oystercard/product/oyster-card.html. There are special versions for tourists, and they will actually deliver it to your home country before you travel if you order it in time. Another option is a travelcard, which is available for 1 day or 1 week's worth of travel. http://visitorshop.tfl.gov.uk/travelcards/1-day/product/day-anytime-travelcard.html. Both these cards will let you use the tube & the bus system. As far as I'm aware, bus drivers can't take cash for a ticket, and single tube tickets bought without an oystercard are a massive rip-off.
The advantage of the Tube, or Underground is that it's easy to use, and pretty quick. There shouldn't be any traffic jams underground. It also gets you directly where you need to go, without you having to worry that you might miss your stop. On the flipside, some stations may require you to do a lot of walking underground to get to the correct platform, they can be very crowded at times, and you obviously miss out on a lot of sights.
Bus travel is cheaper than the tube and can be a great way to get to see the city. They also reach many parts of London that the tube doesn't extend to. Unfortunately, they also can get stuck in traffic jams, so can be slow at times. There's also a riverbus service http://www.tfl.gov.uk/modalpages/2648.aspx but dress warmly!
My favourite way of getting around the city is also the cheapest - by bike. London has a great system of cycle hire, affectionately called "Boris Bikes" as they were brought in by the mayor of London, Boris Johnson. That's him on his own bike when I bumped into him one day. The way they work is that there is a system of docking stations in central London, each holding a good number of bikes. You use your credit or debit card to pay a £1 a day usage fee (if you steal a bike, it gets charged to your card!) and then you get a printed pin number that lets you free a bike from the docking station, and then you can pedal off for up to half an hour for free. Keep the bike for longer, and you start getting charged, depending on how long you have it for, so the secret is to just swap bikes at another docking station before the 30 minutes are up. Here's where you can find more detailed information http://www.tfl.gov.uk/roadusers/cycling/14808.aspx What I like about them is that you can just ride them, leave them in a docking station, and then you don't have to worry about your bike getting stolen while you go out for a meal, or see a show.