If the plan were to be realised, it would mean that the tube system will not be broken up and sold off line by line.
Other options considered included a public flotation with shares for commuters. Although initially popular with ministers, Tory party managers feared this would have led to Labour claims of a "private monopoly" being created - dimming the public's enthusiasm for the privatisation.
Franchising of all 11 lines was also considered, but Brian Mawhinney, the Tory party chairman and a former Secretary of State for Transport, vetoed this because many of the tube lines are so dilapidated that they would be difficult to sell individually to the private sector.
Sir George Young, the present Secretary of State, will make an announcement this week in an attempt to outflank tube managers, who are meeting on Thursday to decide on budget cuts of pounds 100m to the ailing underground network.
"The tube directors are bound to start screaming about their subsidy being cut. I think we will make the point that the public sector has failed to make the service work with the public funds they have been given," said a ministerial aide.
Drastic cuts are expected, and the Northern Line - dubbed the "misery line" by users - will be hit hard.
Its spending plans for track and signalling are expected to be cut by more than pounds 40m. New trains, built under the private finance initiative, should be running this year, but will not improve journey times because the old signalling system cannot cope with the new technology.
Also likely to be affected are Piccadilly Line trains, which ferry passengers to and from Heathrow airport.
Its spending will be cut by more than pounds 30m. Already much-needed maintenance work on stations - some of which are propped up by scaffolding - has been shelved and plans for new escalators have been put on hold.Reuse content