The scheme is part of a strategy to draw people back to the area after the 7 July bombings. It has been estimated that the West End is set to lose £500 million in income from visitors staying away.
The proposals include redeveloping Leicester Square, regenerating the eastern end of Oxford Street and further pedestrianisation in Chinatown.
Covent Garden and the adjacent theatre district will also be subject to improvements.
Council leader Simon Milton commented: "If we are to fully address the economic impact of the bombings and make London's centre truly worthy for the city hosting the Olympic and Paralympic Games, we need to invest now."