I've heard both Louis, but this; "I always dreamed of living in London." most often.

No, it isn't correct. The correct form - in any variety of English - is " I always dreamed of living in London" 'Dreamt to live' sounds as wrong to my ears as it does to yours. I haven't asked the Queen personally, but I'm sure it would sound as wrong to her Majesty's royal ears as it does to our lowly ones. As for why the two members should make this correction, the only explanation I can think of is that they didn't notice that this part of the sentence was incorrect. Correcting learners' work is not as easy as some people think, and I often look on in horror at the so-called corrections which I see in the Notebook here, and at the glaring errors which go uncorrrected. My suspicion is that the foreign learner (most probably a speaker of a Latin language) wrote something like: I always dream to live in London and the person 'correcting' the text simply changed the verb to 'dreamt' and failed to notice the error in the rest of the sentence.

I agree as well. Americans of lazy speech: I always dreamed of living in London. Preferred, by me as well, I have always dreamed of living.... But NEVER I have "dreamed to live" which was the "correction" given by two people, and what caused my concern!! Thanks.

Yes, I agree with Anthony and Leigh. However, depending on the context, it would make more sense to use present perfect and say "I have always dreamt of living in London." To me this sounds like a sentence that expresses a desire that is still true in one's life. If it's "always", then it's gotta be true now! To quote Tennessee Williams' Blanche: "I have always depended on the kindness of strangers." :)

Anthony is correct.