The part-privatisation of the Tube has cost taxpayers almost £1bn, according to a House of Commons Public Accounts Committee report.
It also said maintaining and upgrading the network will cost £450m more than if finance came from government loans.
Under the deal the Public Private Partnership (PPP) firms do not have to end maintenance backlog until 2026 or complete some upgrade work until 2015.
The Department for Transport said it was confident PPP would deliver.
But the report said it may have been more beneficial for the firms to have taken control of only major upgrades which London Underground said it was unable to complete.
Tube Lines and Metronet are the two consortia now responsible for the maintenance and upgrading of the underground because of PPP.
Committee chairman Edward Leigh said the set-up costs of the partnerships include London Underground's costs of £180m and £275m of bidding firms' costs.
The report said although the bond financing scheme - favoured over PPP by Transport for London (TfL) - would have saved about £90m per year, it would have been more risky.
A TfL spokesman said: "TfL has consistently said that the London Underground PPP deals are an expensive and over complicated way to manage the maintenance and renewal of the Tube.
"Nothing has yet encouraged TfL to change that view."
A Department for Transport spokesperson said: "We are in the third year of a 30-year contract which is making up for decades of under investment.
"We have already seen cleaner stations and more trains available at peak hours."