London commuters could be hit by new fare increases to pay for the policing of the transport network during the 2012 Olympics.

Services could also be cut if the Department for Transport fails to cover the £27million cost of ensuring passenger safety during the Games.

Ministers insist that negotiations about funding are continuing but sources say that police and transport companies are becoming increasingly concerned that passengers could be forced to pay some or all of the bill.

Londoners are already facing higher council tax bills to pay for the Games as well as rising costs for Tube and train travel.

British Transport Police have submitted a funding bid to cover the cost of extra officers and vehicles to cope with the thousands of additional passengers using the transport system during the Olympics.

These will be used to prevent overcrowding at key stations and tackle incidents such as vandalism that could cause delays as well as to protect against possible terrorist attacks.

A source close to the negotiations said: "We are arguing that this is a special event and it should be paid for by a one-off Government grant but the signs coming out of the Department for Transport are not entirely positive.

"If the money doesn't come from the Government, then the rail operators will have to carry the cost and that means that passengers will ultimately pay. There is a lot of concern and strong views are being expressed about this privately."

Concern about the Government's attitude to meeting the costs have already been raised in the House of Lords by Lord Imbert, a former Met commissioner.

He told peers: "Transport security is a critical element in the preparation for the Olympic Games and therefore any further failure or delay in clarifying the funding provision will add unnecessary risk to the Games and their preparation, particularly at a time like this when the threat level is severe."

Labour peer Lord Rosser also urged the Government to foot the bill. The budget set by the police is intended to cover their expenditure from April this year until December 2012, months after the Games.

Under normal arrangements, British Transport Police revenue expenditure, which covers staffing and other day-today costs, is paid for by the rail companies and London Underground.

Up to 240,000 people an hour are expected to use the transport system during the peak Olympic periods and up to 1,000 police officers will be needed to marshal the crowds and keep the network operating safely.

The Department for Transport said it was unable to give any assurance that passengers would not be required to foot the security bill but added that no decision had been taken.

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