The mayor's deal has smothered London's public spaces with what may be the largest piece of corporate branding in existence

London's long-awaited cycle-hire scheme is launched this week. While there's no doubt it's a valuable addition to the capital's public transport options, it strikes yet another blow to the idea of London as a dignified city. First of all, there's the name. Paris has the Velib, Montreal has the Bixi; what does London get? Barclays Cycle Hire. Clearly the good people at Barclays marketing thought long and hard about that one.

Maybe it's not worth getting too wound up about the name – selling the rights to popular institutions is unlikely to make anyone who watches, say, the Barclays Premier League or the Npower Championship even blink. What is new, however, is the prospect of more than a hundred kilometres of the capital's road surface being branded with corporate livery. The city's new dedicated cycle lanes – two of which recently opened, with another ten to come before the Olympics – are called "Barclays Cycle Superhighways" and painted Barclays blue.

London can now claim the dubious honour of hosting what is surely the largest piece of corporate branding in existence. It's not just the scale, the mind-blowing square footage, that is shocking about this – it's the principle. We're not talking about some supersized billboard here: we're talking about the mayor selling off the very road beneath our wheels – one of the few parts of a city that counts indisputably as public space. Whether they realise it or not, whether or not they even care, from now on thousands of cyclists are doomed to commute on a giant Barclays ad.

The sponsorship deal, worth £25m, has been presented as a coup for Boris Johnson. It has enabled him to recover some of the £140m Transport for London spent on the cycle-hire scheme and has even been presented as "payback" for the mayor's support of the banks during the credit crunch. Surely, however, £25m is a small price to pay for such an invasive piece of branding? If a city of the global stature of London can't afford to provide rental bikes without turning its urban fabric into a massive endorsement, we're in trouble.

There is something, too, in the gibes suggesting this is not just Barclays blue but Tory blue. Neither New Labour nor former mayor Ken Livingstone did anything to prevent the growing privatisation of the city, but it is hard to imagine Livingstone selling off a chunk of the public realm in such brazen fashion. Johnson seemingly lacks any sensitivity to the ethical or aesthetic side-effects of his deal-making – this is, after all, the man who condemned the Stratford Olympics site to a hideous 115m-high sculpture – precisely the kind of vainglorious ego trip the Olympics can do without – based on a 45-second chat with Britain's richest man in the cloakroom at Davos. We must be careful not to assume a loss of innocence; private ownership and interests have held sway in this city for centuries, and often cooperation between private and public bodies is the best way to meet the city's needs. However, the public realm that the Victorians handed over to municipal authorities to manage in the public good – including streets and pavements, squares, and infrastructure such as transport and sewage networks – has been under steady assault since the privatisation of the Thatcher years.

A decade ago, Naomi Klein argued in her book No Logo that we had reached a point where it seemed nothing could happen anymore without a corporate sponsor. The inevitable upshot of their growing social power was that brands wanted an expanded visual presence. T-shirt logos and media advertisements were no longer enough: branding had to be a fully immersive experience. As the superhighways prove, there is no amount of space a brand will not happily fill, with public bodies all too willing to hand it over. TfL is becoming ever more imaginative about the bits of Tube stations it will sell off to advertisers – including, now, the space between escalators and the gates of the exit barriers. Every year the Regent Street Christmas lights, once a public gesture organised by the Regent Street Association, turn a major thoroughfare into a 3D advert for some fashion label or blockbuster movie.

Increasingly entire pieces of London have become brands in their own right, a process that began in the 1980s with the privately owned Canary Wharf development. Since then, so-called "business improvement districts" have been popping up all over the capital under the banner of regeneration: Broadgate in the City, Paddington Basin, Kings Cross Central, the new Spitalfields Market, the More London development near Tower Bridge. It's a national phenomenon, too, exemplified by "malls without walls" such as Liverpool ONE or Brindleyplace in Birmingham. They might look like other parts of the city, but they are very different. Stroll through Broadgate and you'll notice the logo of developer British Land studding the pavements. These are privately owned developments, policed by private security guards who can throw you out for the slightest misdemeanour or – if you happen to be sleeping rough, say – simply for disrupting the projection of affluence. In the case of More London – a series of sterile glass blocks set amid some rather uptight landscaping on the South Bank – the very name is a deliberate deception. The developers are trying to claim this is just an ordinary piece of the city. Don't believe it.

Anyone who wants to find out more about the insidious privatisation of British cities should read Anna Minton's latest book, Ground Control. The point is that we are in danger or running out of unbranded space. Though it may seem innocuous, the branding of cycle lanes sets an all-too-exploitable precedent. As citizens we have a communal birthright, which includes the public realm. Our representatives are supposed to protect that – not sell it off to corporations who are neither responsible nor accountable for the spaces of which they claim symbolic ownership. Politicians seem only too ready to turn our cities into horizontal billboards. If we're not vigilant, the urban landscape is going to become a brandscape.