Last week London mayor Ken Livingstone confirmed he would demand a judicial review of the project. Now, Mr Kiley has told the newspaper that even if the government wins the day in court, he might not allow the project to proceed as planned. He indicated that he could make it impossible for bidders involved in the scheme to raise finance by saboataging the credit rating of Transport for London - the London authority run by Mr Kiley, which will ultimately pay the private companies for the necessary upgrades.
'Transport for London will have to get a credit rating that enables it to get the money at a rate that eveyone can afford. We might get very baulky about that', he said.
'We'll have the same concerns that the credit committees at the banks will have. Is this a proposal that makes sense? Is it fundable. From a fiduciary standpoint, can the Transport for London board go along with this?
'In a normal business proposition like this we would be advocating, but we're on the outside looking in and we're very unhappy with it'.
Mr Kiley also vowed to stay on as chairman of London Transport, a decision that may force the government to sack him. He was appointed by Tony Blair to negotiate with bidders in May, but was expected to resign after the announcement of the judicial review.
As Transport for London is taking London Underground to court and Mr Kiley heads both organisations he is, in effect, doing legal battle with himself.
But he said: 'I've already removed myself from the law suit on the London Underground side. It's certainly a conundrum, but I haven't created this. I've no intention of leaving. There's a London Transport board meeting scheduled for 18 July and I plan to be there with my gavel in hand'.
Last week, transport secretary Stephen Byers pledged to push on with negotiations with the preferred PPP bidders after talks with Mr Kiley broke down. He announced further safety precautions and told the commons: 'There is no question of privatising or part-privatising the Tube'.
But Mr Kiley rejected the safety concessions, saying they could not happen.
'It's like the secretary of state saying, 'This is not privatisation; privatisation will not happen on my watch'.
'It's a dog-faced untruth. This is privatisation'.