Mayor 'forced' £98m buyout of Croydon tram service

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But the move has triggered accusations that he forced the deal through by deliberately undermining the company.

Tramtrack Croydon Ltd has been engaged in a bitter battle with London's transport chief Peter Hendy over the future of the Tramlink, which carries 25 million passengers a year.

Transport for London said the current contract for the 17.5mile network was not flexible enough and forced TfL to make compensation payments over changes to fares and ticketing.

But Tramtrack claimed that TfL wanted to get rid of it and was motivated by a desire to seize control.

Tramtrack managing director Paul Davison accused the Mayor's authority of putting on extra buses to take away their passengers. "They've tried everything they can think of. They've sent letters trying to undermine us to our banks. They've taken us to court and lost," he said.

His general manager Roger Harding added: "Their way of negotiating is they decide what they will pay and then tell you that's it. They 'consult' you and then do exactly what they want."

TfL denied the allegations. A spokesman said: "All we are interested in is providing the best possible transport services for the public. This deal does that." Ken Livingstone said: "This will mean we can plan how to make the improvements required to cater for increasing numbers of passengers."

A TfL spokeswoman said that last year's compensation payment to Tramtrack was £4 million and the rate is increasing annually. "Taking control of Tramtrack Croydon means TfL will no longer have to make those payments."

TfL, expected to take over in summer, said current fares and ticketing arrangements would not change. Planned improvements include doubling off peak services between Elmers End and Beckenham Junction.