The PPP arbiter wants LU to give £4.46bn to Tube Lines for upgrades
Upgrade work on London Underground (LU) undertaken by maintenance firm Tube Lines could be brought under more direct control by Transport for London.
Tube Lines and Transport for London (TfL) said they were "working closely" to "explore all options".
The development comes after the public-private partnership arbiter ruled that LU should pay Tube Lines £4.46bn for work over seven-and-a-half years.
LU maintains it should give the firm £4bn to deliver the upgrades.
Tube Lines, which is responsible for work on the Jubilee, Northern and Piccadilly lines, insisted it needed £5.75bn to deliver the upgrades.
In April the PPP arbiter Chris Bolt asked LU to rethink its "affordability limits" before he gave the final decision by 30 June.
In a jointly-issued statement TfL said it continued to "work closely with Tube Lines and its shareholders, Amey (Ferrovial) and Bechtel, to explore all options to address the issues outlined by the PPP Arbiter".
"The parties are yet to reach any conclusion, but we remain committed to working with Tube Lines and its shareholders to identify the best way of providing the vital improvements the Tube needs," it added.
The company, which employs 2,500 staff, and TfL are in a £30bn PPP agreement.
If Tube Lines' contracts are taken over by TfL it would be the second such instance after work by another maintenance firm Metronet was brought in-house following the company's collapse.
Bob Crow, general secretary of the Rail Maritime and Transport (RMT) Union, said: "If the reports are true that Tube Lines is at last being taken back under public control it would be a welcome development and would kill off the privatisation disaster on the Tube once and for all.
"This will be a recognition on a massive scale that transport privatisation does not work and RMT's campaign to roll out the renationalisation of the rail network will continue regardless of who forms the next government."