This exceptional status of London, which was answerable only to the King and enjoyed his full protection, was a strong influence in making it the outstanding commercial centre of the time. Its government was both secular, under the portreeve, and ecclesiastical, under the bishop. There were no new powers granted and the freedoms of the citizens, which had been enjoyed in previous years, were now enshrined in law. These laws were based upon the older Anglo-Saxon laws and made London equal to the shires, having rights beyond its physical boundaries. The assembly, or folkmoot, had very early roots and had long decided matters of importance to the community. There is evidence that a sheriff oversaw the Hustings of London, not unlike a shire court. It would have dealt with work which was beyond the scope of the folkmoot and has left traces in the English legal system of today. The sheriff himself was the natural Norman development of the Saxon portreeve and was a very powerful man.

The King built the Tower of London at the watergate on the western edge of the city wall, not only to observe and intimidate the most important city in his new realm, but also to protect it. A second castle, Baynard's Castle, was erected by Ralph Baynard in the east, with a moated keep, Monfichet Tower, nearby. Though London is not mentioned in the Domesday Survey of 1086, we know that its population of both Normans and Saxons was growing fast. The charter and the new-found stability served to increase both trade and numbers as livelihoods became secure once more. This happy situation remained to the end of William's reign. His successor, William Rufus, showed less regard for the people of London. He is notable for his building works: the great hall at Westminster, reinforcement of the Tower of London and rebuilding the Thames bridge which had been seriously damaged by flooding. In 1087, the city was devastated by a great fire and St. Paul's was burnt to the ground (though it was soon rebuilt).