Transport for London (TfL) has secured £1.6bn in emergency funding to keep Tube and bus services running until September.
Under the bailout’s terms, London mayor Sadiq Khan is expected to restore a full Underground service as soon as possible.
He has also agreed to increase bus and Tube fares by 1% above inflation.
Mr Khan had urged the government to provide support or risk TfL running out of money.
BBC London Political Editor Tim Donovan said other measures agreed included:
- Placing Stay Alert advertising on the transport network
- Reporting staff absenteeism rates to civil servants
- A longer-term review of TfL finances.
The BBC has been told a £500m loan agreed with the Department for Transport forms part of the total.
A mayoral source said the government had “belatedly agreed financial support for TfL to deal with Covid-19 – as they have for every other train and bus operator in the country”.
“They have forced ordinary Londoners to pay a very heavy price for doing the right thing on Covid-19 by hiking TfL fares, temporarily suspending the Freedom Pass at busy times and loading TfL with debt that Londoners will pay for in the long run.”
Mr Khan’s offer to raise fares by 1% above inflation goes against a pledge made during this year’s mayoral election campaign.
In the run-up to the ballot, since deferred until 2021, he had promised “cost of living” increases in line with the Retail Price Index.
TfL had said it would have been forced to issue a Section 114 notice – the equivalent of a public body going bust – if no deal had been reached by the end of the day.
London mayor Conservative candidate Shaun Bailey said the government had had to take control of the TfL board and its finances, adding: “The coronavirus highlighted existing structural flaws within TfL’s balance sheet – the primary cause was our profligate mayor.”
Two unions welcomed the emergency funding.
Manuel Cortes, general secretary of the TSSA transport union, said it would prevent services “coming to a halt”.
Mick Whelan, general secretary of the train driver’s union Aslef, said: “It would have been a disaster for the capital, and the country, if the Tube network – and London buses – had stopped running.”
It costs £600m a month to keep the network running on its current reduced service.
The lockdown has led to a 95% cut in people using the Tube compared to this time last year.
The number of bus passengers has also dropped, by 85%, and customers no longer have to tap-in to pay for rides as part of measures to protect drivers.
Most TfL services are still running, but 7,000 staff – about 25% of the workforce – have been furloughed to cut costs.