David Beckham, Jimmy Page and Leona Lewis will launch the celebrations as London is handed the Olympic flag with 1432 days to the 2012 opening ceremony.
The Beijing closing ceremony began at 1300 BST and London mayor Boris Johnson is set to receive the flag at 1400 BST.
An eight-minute presentation follows, featuring a red double decker bus.
Former England captain Beckham will kick a ball into the athletes to spark a live link-up to the handover party outside Buckingham Palace in London.
The London party in The Mall, which is expected to attract up to 40,000 people, will be hosted by Claudia Winkleman and Matt Baker and feature musical acts including McFly, Will Young, Scouting for Girls and The Feeling.
It will also feature British Olympians including Dame Mary Peters, Roger Black, Sally Gunnell and Sharron Davies.
The closing ceremony in Beijing is scheduled to end at 1515 BST, but the party in The Mall will go on until 1700 BST with entertainment from a variety of musical acts and a flypast by the Royal Air Force's aerobatics team, the Red Arrows.
London's Ј2.5m production at the closing ceremony, hailed as "London loud and proud", also features British gold medal winning cyclists Chris Hoy and Victoria Pendleton, riding around the Bird's Nest.
Hoy, who became the first British athlete in 100 years to win three gold medals at one Games, will also carry the British flag at the closing ceremony.
Bill Morris, London 2012 director of ceremonies, said London's part in the spectacle would be "simple and creative".
After the flag handover, a version of the national anthem will be sung by the National Youth Theatre.
London's set will start with a red London double-decker bus driving around the Bird's Nest stadium.
The bus will be backed by a musical sequence which combines elements of the shipping forecast, Jersualem, Greensleeves and harmonies based on the chimes of Big Ben.
Hoy, Pendleton and BMX world champion Shanaze Reade, dressed as everyday Londoners, will then follow on their bikes.
Three dance groups will also be involved - the Royal Ballet, street dance theatre group ZooNation and CandoCo, a company which specialises in mixing performers with and without disabilities.
The dancers will surround the double-decker when it comes to a halt at a bus stop, and a 10-year-old girl from east London, Tayyiba Dudhwala, will emerge to receive a football from another girl, Erika Tham.
The bus will then transform itself, with the top half folding down in segments to show a privet hedge cut into shapes of the London skyline: Tower Bridge, Battersea Power Station, the Houses of Parliament, while a phalanx of black umbrellas will be unfurled alongside.
Then X-Factor winner Lewis will emerge from the roof on a rising column to sing an RnB aria before Led Zeppelin guitarist Page emerges for the duo to perform a new version of his band's classic single 'Whole Lotta Love'.
Page said: "Anyone who's heard Leona just knows how brilliant she is and the emotion that she can generate in her vocals.
"I still didn't know how she was going to do Whole Lotta Love until I heard her first sort-of playback of it and it was just spine-tingling."
Lewis added: "To be involved in this is incredible.
"I can't believe I actually was asked to do it, I am so very honoured, especially to be working with such a legend like Jimmy Page is amazing for me."
As the song nears its conclusion, former England football captain Beckham will appear on another lift, accompanied by Tayyiba, and will kick a football into the crowd of athletes, sparking the live link-up to the handover party outside Buckingham Palace.
Morris admitted he was stunned by the scale of the opening ceremony, which involved drums, a light show and 29 sets of fireworks, but said he was not overawed.
"I can genuinely say I did not feel a sense of nervousness that we had to follow that because London brings other things and it will be a different place and a different time," he said.
"We will take a London approach and will be different. Our approach is to keep it simple and creative, to make it youthful and diverse, entertaining and fun."
He said the segment was neither a short version of the likely 2012 opening, nor an attempt to encapsulate Britain in eight minutes, but it was a small "fun" taster of what is to come in four years time.
London 2012 chairman Sebastian Coe admitted the handover slot was a tough prospect but believed it would be successful.
"We are not going to win over everybody but it is something that will appeal both to younger generations and to more mature generations such as myself," said Coe, 52.
"I just love the version of Whole Lotta Love that he (Jimmy Page) and Leona Lewis have done.
"I hope the atmosphere on The Mall and across the entire UK will be electric.
"It is a very proud moment for us."
There will be celebrations across Britain with more than 400 flags being raised from Land's End in Cornwall to Unst Island, the country's northernmost island, off the Scottish coast.
Choirs will perform traditional songs in 14 cities, including "Danny Boy" in Northern Ireland.
With performances in churches, libraries, museums and parks, organisers say they hope it will be the country's biggest singalong.
East London will host a 1948 street party featuring vintage clothes, afternoon tea and post-war music to remember the last time the Olympics came to the capital.
Dozens of giant screens will be erected across the country for Britons to watch the handover form Beijing.
(BBC)
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