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The accident happened at 0844 GMT today as the 0758 commuter train from Sevenoaks in Kent, was pulling into the station, which is in the heart of the city's financial district.
It is understood the brakes on the train, which was travelling at no more than five miles (eight kilometres) per hour, may have failed.
Fifteen people were trapped inside the train after the sixth carriage of the 10-carriage train, which was carrying 1,000 passengers, was pushed on top of the fifth by the impact of the crash.
More than 80 fire-fighters, 100 ambulance crew and 11 doctors were on the scene within minutes.
One man, believed to be in his 20s, was cut free from the wreckage with head and abdominal injuries but died on his way to hospital after suffering a heart attack.
Dozens were transported to the nearby St Bartholomew's, Guy's and London hospitals. The worst-injured were airlifted by helicopter.
Paramedic Peter Westwood said: "It was a real mess, just a tangled wreck where the two carriages came together.
"It was a pretty horrific sight, believe me."
Transport Secretary, Malcolm Rifkind, who was in Scotland at the time of the crash, flew straight to the scene of the accident.
Dr Kenneth Hines, London unit co-ordinator of the British Association for Immediate Care (Basics), who was one of the first on the scene, said: "It was organised chaos. A large number of people with many injuries were removed rapidly. Most of the casualties had limb and compression injuries. "
Passengers on the train who were relatively unscathed spoke about the accident.
Denise Farrelly, aged 20, from Forest Hill, south London, said: "I just remember the lights going out and seats being thrown up in the air, the train seemed a bit fast, a lot were ready to get off and one man had already opened the door when there was a massive bang.
"People were smashing into each other and one woman had her leg jammed between two seats."
Christina Gale, 38, a personal assistant from Grove Park, south-east London, said: "Everything went silent, I was trapped between two people. There was a woman beside me and she was bleeding.
"My seat landed on top of me. There was a man thrown in front of me, he had been sitting four rows back."
Questions are now being asked about the safety of British Rail's ageing rolling stock and whether low investment in the railways is to blame.
Jimmy Knapp, General Secretary of the National Union of Rail, Maritime and Transport Workers, said: "We want to know why this train failed to stop and also why it failed to withstand an impact at low speed."
A BR spokesperson said: "Normal procedure is for drivers to pull up about 10 feet (three metres) short of the buffers. What we will have to find out is whether the driver was in full control of the train, whether he was incapacitated, or whether there was something wrong with the train."
It later emerged that 542 people had been injured in the crash.
The dead man was named as 24-year-old computer programmer, Martin Strivens, from Orpington in Kent.
A second person, 59-year-old Patricia McCay, from Forest Hill in south London, died three days after the accident from injuries sustained in the crash.
The official report into the crash published by the Health and Safety Executive the following September blamed driver error and ageing rolling stock.
The driver, Maurice Graham, 25, was found to have traces of cannabis in his blood in a drugs test conducted three days after the crash but the inquiry found there was insufficient evidence to suggest this had caused the accident.
The report did say, however, that no defect had been found with the braking or tracking systems on the train and that Mr Graham had therefore "failed to brake properly".
A total of 15 recommendations were made in the report to help prevent or reduce the consequences of buffer-stop collisions at stations.
These included driver training, the introduction of automatic train protection technology, mandatory drug and alcohol tests on train drivers, the installation of "black box" data recorders and the withdrawal of all old rolling stock.
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