Selected bits from the Wikipedia entry:
"Waterloo Sunset" is a song released as a single by The Kinks in 1967, and featured on their album Something Else by the Kinks. It was composed and produced by The Kinks lead singer and songwriter Ray Davies and is one of the band's best known and most acclaimed songs.
The record reached number 2 on the British charts in mid 1967 (it failed to dislodge the Beatles' "All You Need Is Love" from the number 1 position). Davies considered the song a professional milestone, where he managed to blend the commercial demands of a hit single with his own highly personal style of narrative songwriting. The elaborate production was the first Kinks recording produced solely by Davies, without longtime producer Shel Talmy. In subsequent arguments with Kinks management over the direction of the band, Davies would say "I've done 'Waterloo Sunset,' now I want to do something else."
A London FM radio poll in 2004 named this the "Greatest Song About London," while Time Out named it the "Anthem of London." It holds spot #42 on the list of Rolling Stone's 500 Greatest Songs of All Time. Influential pop music journalist Robert Christgau has called the song "the most beautiful song in the English language." Pete Townshend of The Who has called it "divine" and "a masterpiece." Allmusic senior editor Stephen Thomas Erlewine concurred, citing it as "possibly the most beautiful song of the rock and roll era."