The capital's commuters are facing chaos as London Underground staff stage another walk-out in their long-running dispute over pay.

Members of the Aslef and RMT trade unions began their industrial action at 8.00pm on Tuesday evening, ending at the same time on Wednesday.

The unions are demanding an increase of 5.7 per cent. They claim that London Underground bosses have refused to go into arbitration on the issue.

"This dispute could be averted if LUL bosses are prepared to go to arbitration," Aslef general secretary Mick Rix said before last week's action.

"I hope that ACAS can persuade them that talking is better than senseless confrontation and megaphone diplomacy which can only inflame the issue."

The RMT union has said talks could begin on Sunday if London Underground agree.

"As we have said to both RMT and ASLEF, we remain willing to talk about a range of potential improvements to staff terms and conditions. This is precisely what we have been doing today with TSSA - the second largest union representing LU staff," said a spokesman for the company."These talks have taken place in a constructive manner without the need for either arbitration or mediation and we will be meeting with them again next Tuesday. We would urge RMT and ASLEF to reconsider their refusal, to date, to join their TSSA colleagues with us around the negotiating table.

"This year's pay deal is settled. But let's look forward and work together to serve our customers and give London a world class Tube."

However as the strike looms, the Guardian has reported that the European Commission is set to back government plans to part-privatise the network.

Under the scheme, trains would be run by the public sector, with two consortiums - Metronet and the Tube Lines Group - accepting responsibility for maintenance of the tracks.

The Commission received complaints from London mayor Ken Livingstone that the plans involved illegal subsidies to encourage private investment, and from foreign companies who claimed that the tendering process was unfair.

A formal investigation was launched, which is tomorrow expected to approve the government's controversial policy in full, according to the newspaper.

The Department of Transport declined to comment.