Desmond has trademarked the name London-i and developed a masthead logo.
Insiders say he has lost patience with an Office of Fair Trading investigation into Metro's control of free newspaper distribution on the London Underground and at mainline stations, and may even launch London-i this year. The investigation into Metro, which was sparked by Desmond, has been under way for about 18 months.
Associated Newspapers is preparing to counter the London-i launch with an afternoon edition of Metro. The publisher is also reported to be planning a free edition of the Evening Standard, but it is unconnected to Desmond's launch.
Separately, Desmond's Express Newspapers has strenuously denied that it intends to relaunch the Daily Express as a free newspaper.