You can get a perfectly decent furnished flat in a normal inner-suburb area of London on little more than half the suggested £1600, and if you plan your flights in advance the cost on a low cost carrier is negligible. £40k per annum isn't going to offer you the same kind of luxury in London you might get in other cities, but it's a perfectly adequate salary to enjoy the city on.
OK I guess it depends on how you define 'live in London', I guess. I used to live in Staines, but I hardly believe that moving to Staines represents the ambition of people saying the want to move to London because that's where the action happens. I admit I don't know that much about actual rental prices right now, but a cursory web search shows to me that my 1600 pounds is closer to the average for a 1-bedroom apartment than 800 pounds. 700 pounds is what an average apartment (nothing fancy) costs in my rural hometown in Belgium.
