Tube talks 'make progress'

Mr Livingstone was threatening to take court action

The government has said it is "quietly optimistic" of reaching a deal with London mayor Ken Livingstone for the modernisation of the Underground.

A Department of Transport, Environment and the Regions (DETR) spokesman said talks between the two sides were at a "very advanced stage", after negotiators had made good progress towards an agreement

"There are a lot of issues to be resolved - but we hope to get a deal sooner rather than later," he said.

But the DETR refused to comment on a report in the Sunday Telegraph that Mr Livingstone had dropped his opposition to part-privatisation.

The says the move came after Chancellor Gordon Brown agreed to pump more than £4bn of taxpayers' money into the Tube during the next seven-and-a-half years.

Court action

Last month discussions appeared to have ground to a halt, with Mr Livingstone threatening court action against the government.

He accused the chancellor of reneging on a deal reached with his transport commissioner, Bob Kiley.

Mr Livingstone claimed government plans breached the legal requirement to provide a safe, efficient and economic transport system.