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Twenty years ago, it was Canary Wharf's American-style design for deep-plan, quick-build skyscrapers that called the shots in the London office market. Two decades on, the gleaming elegance of No 1 Canada Square is largely hidden by a ring of boxy blocks, and it is the City of London that has pulled ahead in the race to erect inspired skyscrapers. As Peter Wynne Rees, the Corporation of London's chief planner, puts it, "Who would ever have thought that the Old Lady would have hitched up her skirts?"

Top architectural names are more prevalent than ever in the Square Mile – and not just the noble lords Foster and Rogers. Take the latest office project to win planning permission from the corporation – New Street Square. The developer is archetypal property fatcat Land Securities, and the site is a group of tired 1960s buildings behind Foster's Sainsbury's headquarters building on Holborn Circus.

When a new generation of directors took over at Land Securities, they scrapped the design for a megablock – lambasted as "the midtown monster" – reduced the scheme to one-tenth of the size and opened it up to a limited architectural competition. The winner was high-flying new kid on the block, Bennetts Associates. And its scheme was a group of four modest-sized blocks aimed at City lawyers and financiers and grouped around a new square.

This square will take the place of the raised podium there now, and is conceived as "a destination space", according to Rab Bennetts, the practice's senior partner.

The interweaving of private offices and civic space is firmly in the tradition of Broadgate, on which Bennetts worked when he was with Arup Associates in the early 1980s. The main innovation is that nearly all the ground floor is taken up by shops and restaurants that spill out on to the central public square.

"We investigated the pattern and grain of the city streetscape, in which small alleys lead to bigger things," says Bennetts. "There are two routes through the site, and you discover the new square on your way through. And we placed the retail alongside them and the square to turn them into animated spaces."

Aside from Land Securities' New Street Square, most development in the City is proposed to the east of St Paul's Cathedral and south of Swiss Re. The highlights here are a cluster of the latest skyscrapers, all bearing a top architectural brand name. Two are by Grimshaw, and one each by Richard Rogers Partnership, Foster and Partners, Kohn Pedersen Fox and Jean Nouvel, the French royal gold medallist. There is even a scheme at Bucklersbury, south of Mansion House, that is being hatched by two ultramodernists on either side of the Channel, Foster and Nouvel.

What does this latest generation of City skyscrapers have in common? As Wynne Rees, says approvingly, "They are all ivory towers for the knowledge industry, and none of them follow the rules of efficient office buildings.

"City banks and financial companies have got rid of their back offices out east to Canary Wharf or Bangalore, where they can economise through lower labour costs and lower building costs and produce a standard product. In central London, they can afford to do something different, and they do that by being a patron of architecture and creating buildings that are different from the others around them. They buy a Bentley rather than a Ford."