The privatisation row over London's Tube will go back to the High Court next month.

A court ruling on Friday gave permission for London's mayor Ken Livingstone and his transport commissioner Bob Kiley to renew their legal challenge to the government's plans to allow private companies to run the Underground.

Mr Justice Scott Baker ordered a four-day hearing which will start on July 23 at which the mayor will challenge the government's decision to go ahead with its £16 billion plan to modernise network.

Livingstone argues that the arrangements for PPP contravene European funding and procurement rules.

He has also claimed the deals leave a "funding gap" of £1.5 billion, that could only be bridged by a 25 per cent fares increase, if not covered by government guarantees.

Attempts by the government to get the PPP contracts signed by the end of June will now be halted.

Bob Kiley said: "I am pleased the court has recognised the importance of this case. Transport for London remains opposed to this PPP and has been forced to take this legal action to safeguard the future of transport investment in the capital," he said.

"For the government to force this unsafe and expensive PPP on London and at the same time saddle the city with billions of pounds of extra debt is totally unacceptable.''

London Underground welcomed the decision and the fact that the case would be heard quickly.

"We are sorry to be here in the first place, but we are confident that we have a good plan and that we have a good case," said a spokesman.