I found the following on the Transport For London website. (I haven't been researching this since my last post btw, just been away from the PC til now!)
From TFL website
Buggies
Low-floor buses are designed to allow buggies to remain unfolded in the wheelchair space, since this is the only place in which they can travel safely. If somene in a wheelchair wishes to board, and the wheelchair space is occupied by standing passengers or buggies, standing passengers will be asked to make room lease make sure that buggies are safely positioned within the designated area. Unfolded buggies cannot travel in the gangway.
Wheelchair users have priority over everyone else for use of the wheelchair space. If someone in a wheelchair wishes to board, and the wheelchair space is occupied by standing passengers or buggies, standing passengers will be asked by the driver to make room if possible, buggy owners will be asked to fold them and put them in the luggage space or keep them by their side.
If you have a buggy, you should be able to board any low-floor bus unless (in the driver`s opinion) it is so crowded that there is no room for you to travel safely. You will only be refused admittance when it is absolutely necessary. NO ONE ALREADY TRAVELLING WILL BE ASKED TO GET OFF THE BUS. (my capitals)
So if you were told to leave the bus then you could report it to the bus company. As it says in there and as I said earlier, buggies can be folded - you have the choice. Wheelchair users do not and as they can only travel in that designated space then, yes, they should have priority over that space.
And margoandjerry, your point about businessmen makes no sense at all as AFAIK business men are not in the habit of pushing their stuff around in huge trolleys and even if they did, my point still stands and the wheelchair gets the space. The baby doesn't make room - the pushchair does.
Anyway, I have no idea why I've pounced on this point as I have no crusade on behalf of wheelchair users and must apologise to the OP for derailing the thread