A source close to the project said: "Alcatel has been given the nod.
It's sensitive giving the contract to Alcatel – this contract would have gone a long way to helping with Alstom's problems."
Tube Lines chief executive Terry Morgan would not confirm the Alcatel–Mouchel win, but said: "We're two or three weeks away from a formal announcement. The project is worth about £400m, then the remaining £100m goes on things we have to do in station design changes and project management."
Morgan added: "This is the third major project we have let, and is the largest in the first seven-and-a-half years [of Tube Lines' 30-year PPP contract]. We will place £1bn of work this year."
This is the third major project we have let. We will place £1bn of work this year
Tube Lines chief executive
Mouchel business development director Stuart Black said: "We are bidding with Alcatel for that contract, but I can't confirm any further details."
The contract will involve improved signalling on the Jubilee, Piccadilly and Northern lines. Work will start as soon as a formal announcement is made, although some enabling work has already been carried out.
Last year, six bidders expressed an interest in the scheme, and set up a number of test sites to assess the technology. A shortlist of three was later drawn up, which included German company Siemens.
Earlier this year Alstom won a £100m contract to make an additional seventh carriage for all Jubilee line trains. This will be complete by 2006, four years ahead of the original timetable.