The Greater London Authority (GLA) has launched an inquiry into the possibility of the capital's pubs, bars and clubs opening 24 hours a day.
The authority is aiming to investigate public disorder, the health implications of alcohol consumption and noise pollution.
It is also discussing licensing decisions with London borough councils and the practicalities of a 24-hour city including the issue of transport late at night.
If the authority comes out in favour of a 24-hour city other large cities across the UK are likely to follow suit and it would be a major boost for the trade's campaign for rapid licensing reform.
A committee has been set up to investigate the issues and the GLA has also asked for submissions from interested parties.
Evidence from the trade has been presented by Business in Sport and Leisure (BiSL). It said the solution to the nuisance caused by people leaving late-night premises is to introduce flexible licensing hours and the new separate personal and premises licences suggested in the government's licensing white paper.
BiSL also pointed out other benefits of late-night licensing. Late-night licensing can help regeneration, tourism and employment, it added.
BiSL hit out at claims that pubs are the cause of all disorder on the streets.
"This industry only exists because of consumer demand and a much greater disturbance will occur if people are left to walk the streets drinking out of cans," the submission said.
"There is no doubt that one solution in London would be to pay much greater attention to clearing up litter and rubbish. This is what ratepayers pay for and it is unacceptable to say this is all caused by the late-night entertainment industry."
Westminster City Council's intention to introduce "zoning" where bars can only open until 11pm, midnight or 1am in certain areas, was criticised by BiSL.
The trade has been outspoken in condemning Westminster's licensing policy which has restricted the number of late licences awarded.
It was feared other London boroughs would follow suit but Camden Borough Council, which recently issued its draft licensing policy, has not backed Westminster's stance.
Although the council has said it will try to group pubs and bars away from residential areas it has not ruled out late licences and said licences would always be renewed unless there were strong reasons against the renewal.
Related stories:
Westminster council attacked by BiSL as late-opening row continues (13 March 2002)