New homes in London are to be offered exclusively to British buyers but only where the asking price is £350,000 or less.
The restriction on overseas sales and marketing will be limited to three months, following a deal between City Hall and leading developers.
The move will see new homes offered exclusively to Londoners for a month, then to other UK based buyers for a further two months.
House builders will be free to market properties to foreign buyers after three months.
Developers including A2 Dominion, Bellway, Berkeley Homes, Barratt and Taylor Wimpey have signed up to the voluntary ban on foreign sales.
Mayor Sadiq Khan promised to give Londoners 'first dibs' on new homes during his 2016 election campaign.
Foreign investors have been for soaring property values. Many first time buyers find themselves priced out of the market.