The Radio Authority, the body which regulates UK commercial radio, awarded the 12-year multiplex licence for the Greater London area to CE Digital Ltd, which is jointly owned by the two companies.

Capital is best known for its flagship London pop station as well as the Capital Gold network of stations, BRMB in Birmingham and Red Dragon in south Wales. Emap's stations include Kiss in London and the Magic network of oldies stations.

The companies are also involved in other winning bids for South Yorkshire and Glasgow.

Going digital: Capital FM presenter Steve Penk

Digital radio licences are awarded as bundles of services, known as multiplexes, rather than single frequencies. Each licencee can offer a range of different stations rather than just the one.

Although listeners will need to buy new sets, digital radio offers clear reception, and text such as playlists, sports scores or other information can also be carried by the signals.

Most of the stations on the London licence can already be heard on the capital's analogue airwaves anyway. They are: pop station Capital FM, oldies station Capital Gold, dance station Kiss 100, rock station Xfm, "soft and melodic" station Magic, news station News Direct, "news views and entertainment" station LBC and Asian service Sunrise Radio. There will also be a new "hot adult contemporary" station as well.

The BBC is already broadcasting digital service

In London, CE Digital beat off a bid from a venture which teamed up former Sun editor Kelvin MacKenzie's Talk Radio and broadcaster Chris Evans' Ginger Media Group, and a further offer from a group led by Chrysalis Group, owners of the Heart and Galaxy stations.

The South Yorkshire licence was won by the sole applicant, Emap Digital. It features services from Hallam FM, Magic, Kiss, Trax FM, Classic Gold, Xfm and a new adult contemporary service.

In Glasgow, the sole applicant was Score Digital, a wholly-owned subsidary of Scottish Radio Holdings. Its services will include Clyde 1 and 2, Qfm, Xfm and Kiss (owned by Capital and Emap respectively,) as well as "cutting country" and Asian stations.

In addition, the Radio Authority announced it would be advertising a second Greater London multiplex next week, with a third to follow in 2000.

Digital sets are rare - and expensive - at the moment

The winning companies now face a battle to win the public over to the merits of digital radio.

In contrast to the success of digital TV - with an estimated 1.5m subscribers - there are only an estimated 1,000 digital radio sets in circulation, and in-car sets cost between �500 and �1,000. Emap and Capital are reportedly planning to give sets away to promote their new services.

The BBC is already broadcasting Radios 1 to 4 and 5 Live on digital, along with tests of a sports version of 5 Live. It also plans a new music service to utilise the archives of Radios 1 and 2.

A group of national commercial services, including Virgin Radio, Talk Radio and Classic FM and a series of new stations is set to start broadcasting later this year.