I started commuting in February - and am still struggling with this. It's amazing how seldom I've had to commute in rain though.
I only have a 2 mile commute, so I wear my work trousers / shoes to go to work, with a t-shirt on top and carry my shirt in my backpack. At work I wash and change into my shirt then cycle home with my shirt on. I bought a pair of waterproof trousers from
Halfords. They work well to keep my trousers dry, but drain into my shoes, as someone here said they would! So a spare pair of shoes and socks at work - just in case, is a must.
The biggest issue is a waterproof jacket though. I have a thin windproof jacket that works well for my roadbike but is useless on my commute. It can deal with a light shower, but certainly does not work in a heavier shower, never mind a downpour. I've kind of been coming to the conclusion that I need to lash out on an expensive cycling specific waterproof. I'm reluctant, because I never buy expensive clothes and I don't see why cycling should be any different!
One that I am looking at that seems a bit cheaper is the Tenn Outdoors one.
Vapor jacket
Tenn seem to have a good reputation for 'value' but the jacket is fairly new and I haven't really seen any reviews from people who have it yet.