The UK Department of Transport (DfT) has agreed to provide funding to South West Trains to buy 48 additional rail carriages for its commuter routes.
The new carriages will help increase capacity on trains travelling to and from London Waterloo, providing an additional 2,400 extra seats every day.
Additional carriages will increase the number of railcars on trains from five, six and eight car trains to eight, nine, ten and 12, respectively.
UK Transport Secretary Justine Greening said adding extra carriages to these vital routes will not only ease congestion but also help to improve London's economy.
"Rail travel is more popular than ever and we are delivering the biggest rail modernisation programme since the Victorian era, with £18 billion committed in this spending period," Greening said.
"This includes work on Crossrail and the Thameslink upgrade - two schemes that will transform connections across London and the South East."
South West Trains managing director Tim Shoveller said that the company carries around 300,000 passengers to and from London Waterloo.
"We have already confirmed the introduction of 60 additional carriages, which will be introduced from May next year, and today's announcement that we have successfully secured a further 48 carriages will provide another huge boost to South West Trains' passengers," Shoveller said.
The 60 additional carriages will be made of renovated Gatwick Express Class 460 Juniper vehicles, combined with refurbished models from South West Trains fleet.
The company aims to launch 108 extra carriages to its network between May 2013 and December 2014.