The company, who were founded in 1901 and whose headquarters are in Margate, will produce 2012 products that will include model London taxis and London buses, die-cast figurines, model trains, Airfix models of the Olympic Stadium and Scalextric velodrome sets.

The first products, which will carry the official London 2012 branding, will be launched later this year, the company said.

The licence will run for the next three years in the run up to the 2012 Games and beyond.

This is the first of several toys and souvenirs licences due to be awarded by London 2012.

Paul Deighton, the chief executive of London 2012, said: “One of the most exciting things about our commercial programme is the possibilities it offers in the licensing and merchandise arena.

"We are proud to be working with a truly iconic British company, which can offer us a great range of products across its brands that will celebrate the Games in 2012 and live on for generations after as collector’s items."

Frank Martin, Hornby's chief executive, said:  “This is a great honour for Hornby and an important development for the group.

"We are delighted to have been granted such a broadly based licence to develop a range of products linked to the 2012 London Olympic Games and Paralympic Games - the world’s largest sporting events.

"We have an excellent portfolio of iconic brands and products that are a superb fit with London2012.

"We have some very exciting plans that we are developing...to create official merchandise that will demonstrate the very best of London and the Games.

"This demonstrates the strength of our strategy to assemble a portfolio of iconic brands.

"We can offer major partners significant licensing opportunities across our brands.

"[London 2012] were attracted by our ability to match our product development skills with our existing retail distribution network to sell official merchandise linked to the Games.

"This licence represents a major opportunity for Hornby to grow our sales and to extend the appeal of our products with new consumers.

"We look forward to launching the London 2012 ranges, which we are confident will be very popular, both to collectors in the UK and with overseas visitors.

"The first products will be on sale before Christmas this year."