London Underground has dismissed speculation that it has called off talks with Railtrack over a sub–surface Tube line contract in the wake of the Paddington disaster.

A spokesman said: “There are no plans to look elsewhere. We have not put the discussions on hold, they are still ongoing.” He said LU and Railtrack had agreed a heads-of-term agreement that will establish a framework for Railtrack to submit a price. Railtrack is the sole bidder for the sub–surface lines.

A statement from the Health and Safety Executive, which is investigating the rail crash, said early evidence suggested that the accident could have been prevented by the installation and correct use of a Train Protection Warning System on the now infamous signal SN109.

The HSE is understood to be investigating Railtrack’s maintenance of the signal, which has been passed at danger eight times in six years.

Contractor Amey, which is also part of the Tube Lines Group consortium shortlisted to take over LU’s deep Tube lines, maintains the signal. Amey was unavailable for comment. Simon Murray, who is responsible for Railtrack’s construction investment, said talks were being held on how the crash would affect investment.