London mayor Ken Livingstone has urged ministers to allow the government spending watchdog to examine London Underground bids.

If Stephen Byers was serious about the issue of value for money, the mayor said he should let government auditors examine the bids.

"If the government was serious about evaluating value for money of the PPP bids then they should call in the National Audit Office before signing the contracts as Bob Kiley proposed," said Livingstone.

The mayor's team say they remained "hopeful" that the transport secretary may yet change his mind, particularly following the Railtrack debacle.

Byers has already warned that no u-turn has been made over the future of London Underground in what has become a drawn-out and bitter dispute.

He denied on Thursday that he had changed his plans to allow the part-privatisation of the Tube. Byers said that despite his comments to a Commons committee yesterday he had not changed his mind.

Insiders believe there are a number of reasons why Byers has hinted at a "plan B" option.

Negotiations with the bidders are now in the final stages and his comments may have been a warning shot in order to lever extra conditions. Questions are now being asked about the government's commitment to see the deal through.

Opinion polls suggest that Londoners have failed to be moved by a public relations campaign to promote the deals and the transport secretary may not be relishing even further bad publicity.

Livingstone lost a High Court case to make public a report already commissioned by ministers which questions whether the PPP bids are value for money. If City accountants Ernst and Young reach a similar conclusion the deals will have to be shelved.

Byers rejected claims of a policy change saying ministers have repeatedly insisted that public private partnership is the best way to pay for improvements on London's Underground.

"The PPP for London Underground will have to satisfy the value-for-money tests. There has been no change of policy here. What we have said very clearly though is that we obviously need to have alternatives in places if that is not achieved. What we have not said is what the alternatives would be if value for money is not satisfied. But the issue that was raised was that we have not been talking about value for money," he said.

His comments followed his appearance before the transport select committee on Wednesday in which he said control of all or part of the Tube could be handed to London mayor Ken Livingstone if the two private bids failed to meet the value for money criteria.

Proposals were under consideration to form a "plan B" if City accountants called in to audit the bids conclude they fail the test.

"Keeping [the Underground] in the public sector and handing it over to Transport for London will certainly be one of the options we are considering," Byers said.

One option would be to give one or all of the three tube-line contracts to the Mayor's Transport for London.

The track, signals, tunnels and stations would be controlled by Transport for London, run by the transport commissioner, Bob Kiley. There would still be commercial investment but through public-sector contracts, instead of a public private partnership, where the firms controlled the assets for 30 years.

"We will need to make sure, as part of good, proper contingency planning, that if we decide after the consultation and after the advice that one or all of the contracts is not value for money, that we have got an alternative to turn to," he said.

"I want to make sure that it is an alternative that doesn't build in a year or two years' further delay. We've got to have something where we can move quickly and make sure the investment can continue to go in, even under a different model," the minister told MPs.