ThE DTLR will not underwrite the £65m that consortiums have spent on bids for the London Underground public-private partnership deals.
If the bidders fail to demonstrate that they offer value for money, secretary of state Stephen Byers will dump the part-privatisation and the money will be lost.

But a spokesperson for Tubelines, one of the consortiums, said: "We are not contemplating failure; our bid represents value for money and it has cleared many hurdles to get this far. Nothing has changed."

Tubelines, which is preferred bidder for the Jubilee, Northern and Piccadilly lines, has spent £20m.

The other consortium, Metronet, has spent £45m on bids for the Circle, District, Bakerloo, Central and Victoria lines.

Bidders that did not reach the preferred bidder stage also stand to lose their bidding costs, as they will receive compensation only if Tubelines and Metronet pass the value-for-money test.

There is growing speculation that Byers is considering utilising the tests to extricate the government from the PPPs.