The Hopper fare - which was a key part of Khan's manifesto - will be introduced in September.
Officials believe the move will particularly benefit those on low incomes who often rely on the bus network, and those who live or work in areas that are not well served by Tube or rail services.
Transport for London's ticketing technology is also being upgraded to enable unlimited bus transfers within an hour by the end of 2018.
Bus fares in the capital cost STG1.50 ($A2.95) per journey, with a daily price cap of STG4.50.
"My dad drove the number 44 bus and transport in London has always been a big part of my life," Khan said.
"The cost of a fare in London has risen for eight years in a row and now that I'm mayor I am determined to prevent the cost of travel from becoming a barrier to work.
"The Hopper fare will make life cheaper and easier for millions of Londoners, and will help ensure that everyone will be able to afford to travel around the city.
Source: AAP
