Crossrail, the plan to build mainline rail tunnels under the heart of London, is set to be approved after an 18-year wait, but an upgrade of the Tube network may be sacrificed to pay for it.

The Government is preparing to announce that it will fund a third of the £16 billion cost of the scheme, with passengers and businesses contributing the other two thirds.

Journey times would fall dramatically for tens of thousands of commuters because trains that normally terminate at Paddington and Liverpool Street would continue in deep tunnels connecting the two stations.

Heathrow would be linked directly with the West End, the City and Docklands, with trains carrying 1,500 people taking only 43 minutes to travel from the airport to Canary Wharf.

The scheme would be the biggest expansion of the capital’s transport network for 40 years but could result in long delays to the plans to relieve congestion on London Underground.

Crossrail would not open until 2015 at the earliest, but the Tube is already struggling to cope with passenger numbers, which have risen by a third in the past decade to just over a billion a year.

The collapse in July of Metronet, which maintains nine of the twelve Tube lines, has left a £2 billion hole in the budget for upgrading the network.

Transport for London (TfL) has given the administrators a £900 million loan to keep work going until Christmas. It now fears that it will not be able to recoup this money from the Government and will have to cancel or delay much of the upgrade work, including plans for modernising more than 100 stations.

Some of the projects for adding capacity through new signalling systems and new trains may also be completed years later than planned.

Crossrail would alleviate some of the pressure on the Central Line – and run underneath it – but would do little to ease overcrowding on other lines. A senior TfL source said: “While we are delighted that Crossrail is now very close to being approved, it will be cold comfort if the Tube is then starved of the money it needs.

“It should not be a case of one or the other because London desperately needs both to cope with the growth in population and jobs. But we are receiving worrying signals from the Treasury.”

The Government is concerned that rescuing Metronet and funding Crossrail at the same time would consume the majority of the public money available for investing in Britain’s transport system. There would be little left over for cities such as Birmingham, Manchester and Newcastle, which also need funding to upgrade and expand their rail and tram networks.

Gordon Brown is understood to be keen to demonstrate that a prime minister from Scotland recognises the importance of investing in London’s infrastructure. Crossrail has been estimated to deliver economic benefits worth £30 billion over 60 years, double what it would cost to build.

But Mr Brown is also determined to keep to his fiscal rule on limiting public sector borrowing, and will expect larger companies in London to cover a third of the costs of Crossrail via a supplement on the business rate. The remaining third would come from borrowing against future fare income.

A Bill that would grant powers to build Crossrail is currently passing through Parliament and is expected to gain Royal Assent in the Spring. Construction could start late next year.

More than £300 million has been spent planning Crossrail, and 400 people are currently working on the project, though only a single preparatory shaft has been dug at Moorgate.

London First, the business lobby group, said that its 300 members supported Crossrail but were worried about how much they would have to pay towards it. A spokesman said: “We won’t know whether to cheer or grimace when they make the announcement because we don’t yet know the figures. We would be willing to go back to our membership to sell them the idea of a 3 per cent supplement on the business rate.”

Getting the project on track

1989 A study funded by the Government proposes three projects: Crossrail, a new Tube line to link Wimbledon and Hackney and a Jubilee Line extension

1991 A Crossrail Bill is submitted to Parliament, predicting a cost of £1.4 billion

1994 The Bill is rejected after three Tory MPs, none of whom represents London constituencies, vote against it in a Commons committee

1995 Attempts to revive Crossrail fail because of concerns it would interfere with the privatisation of British Rail

1999 The City Corporation, which supported Crossrail from early on, plans a £2.8 billion bond issue to help pay for it

2000 The Government asks the Strategic Rail Authority to study the requirements for extra passenger capacity to and through London. The resulting London East West Study recommends that both Crossrail and the route from Hackney to southwest London be resurrected

2001 Cross London Rail Links Ltd is formed to plan Crossrail and the Hackney route. The company is now jointly owned by Transport for London and the Department for Transport

2003 Tony Blair says he is “confident” that Crossrail will be built but says it is important to work out how it will be funded

2005 A plan for a Crossrail Bill is included in the Queen's Speech. The Government admits that the line cannot be ready in time for the Olympics

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