The government should scrap its plans for the controversial partial privatisation of the tube, an influential committee of MPs warned on Tuesday.

Cost effectiveness of the proposed public private partnership could never be accurately evaluated, the report by the transport select committee says.

The MPs suggest that expensive disputes over contracts and between employers and staff were "inevitable".

A shortage of funds has made it likely that risk transfer to the private sector has been limited, undermining the policy, the committee says.

Instead, it recommends the government work closely with London Mayor Ken Livingstone and Transport for London, who would eventually have responsibility for investment decisions and safety issues.

The report also calls for government subsidy of the service to meet the capacity increase target of 15 per cent over the next 20 years, which can be justified by the "the potentially vast cost to London and the nation's economy of failing to meet that target".

Increased safety monitoring costs should also be funded by the government.

Downing Street said that PPP would go ahead only if value for money was proven.

"The government has always been absolutely clear that it would go ahead with PPP in the public sector when value for money comparators were made. We have always said that we would not do anything that would put safety at risk," a spokesman said.

Shadow transport minister Eric Pickles described the report as a "stinging indictment" of partial privatisation.

"These findings offer a stinging indictment of Stephen Byers's botched proposals for PPP. It is clear that the Government is reluctant to produce the necessary facts and figures to justify this enormous leap in dark. No other country in the world finances transport projects through this type of mechanism. Mr Byers is determined to take a huge gamble and push through a measure that is opposed by Londoners, transport experts and now the Labour dominated select committee," he said.

"The 'Byers plan' will fail to increase capacity on the Tube and reduce overcrowding and delays which have significantly increased under Labour."

Liberal Democrat transport spokesman Tom Brake described the PPP as "the government's poll tax on wheels".

"PPP will be the government's poll tax on wheels. Just over two years ago, John Prescott was claiming that PPP would save £4.5 billion. Now the government are guessing it could save only £1 billion. Next month, they might discover that it will be costlier than the bond issue which we support."

Livingstone welcomed the conclusions made.

"In the light of this report it should be inconceivable that the government now impose this outrageously expensive and inefficient scheme on London," he said.

"If Stephen Byers decides to ignore this report and tries to impose the PPP, myself, Bob Kiley and our lawyers will examine the contracts in order to determine what must be done, including any grounds for further legal action, to uphold London's interest in a safe and efficient Tube system."

Transport commissioner for London, Bob Kiley, said he was "delighted" with the committee's findings.

"We agree with the Committee's view that the government must commit itself to sustained, increased funding for the Underground and that it should now work with the mayor and TfL to put alternatives to the PPP in place, which will deliver real, measurable and deliverable improvements," he said.

The transport select committee also uses its report to criticise the refusal of treasury ministers and officials to give evidence to the inquiry.

Such a move the report says "threatens to undermine the departmental select committee system".

"Those ministers who make decisions must be accountable to parliament for them," says the report.

However, a spokesman for the department told ePolitix: "Our ministers are happy to give evidence where they have policy responsibility, but not where they don't."