Ken Livingstone has dismissed Stephen Byers' announcement that the government's PPP plan for the Tube will be compared on a "value for money" basis with the mayor's proposed bond issue.

Speaking to MPs on the transport, local government and the regions select committee, Stephen Byers said the controversial public/private partnership scheme would have to prove its value for money against the London mayor's solution for funding the underground network.

Byers told the committee that accountants Ernst and Young were evaluating whether the PPP offered better value than either a wholly public sector solution or the £13 billion bond issue proposed by Livingstone and London transport commissioner Bob Kiley.

Hinting that his commitment to the controversial PPP was less than absolute, Byers said the plan offering best value would be chosen. "The important thing is that we get real value for money. I am not coming at this from a dogmatic position," he said.

Responding to the comments, Livingstone rejected Byers' handling of the issue and said the review should be carried out independently.

"If the government was genuine about properly evaluating the value for money of the PPP bids it would call in the National Audit Office to make the analysis as Bob Kiley and myself have proposed on numerous occasions," he said.

The announcement follows a weekend assertion by Tony Blair that PPP was "on track." "I think the PPP is absolutely on track...for 20 years there was no proper investment," the PM told the BBC.

Byers said that he, rather than the Treasury, would make the final decision on whether the plans would go ahead. "I will take the value-for-money decision on behalf of the government. It will be my decision."