Transport for London has been granted a new short-term funding deal by the Government to keep services running through to June 2022.
An emergency funding package agreed last June was temporarily extended for a fourth time last week and was set to expire at midnight on Friday.
But on Friday morning, TfL announced the Department for Transport had agreed a £200 million funding deal.
It will be paid in three instalments to keep London’s transport network running until the summer.
Under the terms of the new bailout — the fourth to be agreed by the Government — TfL must present a plan by 31 March outlining how it intends to achieve £400 million of savings or additional revenue in the upcoming financial year.
As part of the new deal, the Government has agreed to “top up” TfL’s revenues with grant payments if they fall below a pre-determined passenger revenue forecast as a result of the ongoing effects of Covid-19.
But TfL would be required to pay back any excess if its revenues exceed the forecast.
TfL commissioner Andy Byford welcomed the breakthrough but stressed that it is “essential” for longer-term capital funding to be agreed if a period of “managed decline” is to be avoided.
Mr Byford said: “We will be meeting regularly to work towards agreement on the Government funding of the capital investment priorities shared by them, us and the mayor.
“The Government has confirmed in this agreement that they support the operation and maintenance of essential and safe transport services in London, enabling us to continue our full and vital contribution to economic recovery and to support the Government’s priorities on decarbonisation, air quality and making transport better for users.
“Working together, we must achieve this longer-term funding settlement. Only that would ensure London’s transport network can remain safe, efficient and reliable, can continue to support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole.”
The latest bailout pushes the total emergency funding provided by the Government close to £5 billion over the past two years.
Transport Secretary Grant Shapps said: “These support packages must be fair to all taxpayers and the settlement agreed today provides enough to cover lost revenue from the pandemic while the mayor follows through on his promises to keep TfL on the path to financial sustainability by 2023.”
The settlement agreed on Friday will expire on June 24.