When operational in 2018, Crossrail will connect 37 stations linking Maidenhead and Heathrow in the west, to Shenfield and Abbey Wood in the east.
Originally taxpayers had been expected to contribute around one-third of the cost of the trains, estimated to be around £350m.
However ministers have now accepted a proposal from Mayor Boris Johnson for taxpayers to provide the entire £1bn funding package needed to build the trains in time for delivery and testing in 2017.
Transport for London says the change of finance arrangements will simplify the procurement process, ensuring the project will proceed on schedule.
Mayor Johnson described the coalition’s decision to back his plans as “fantastic news”.
The Mayor added: “With more than 600 carriages providing a ten percent increase in London’s rail capacity Crossrail will transport not just passengers but jobs and growth across the city and beyond.”
In light of the increased public funding Labour at City Hall have called for British based company to be awarded the contract to build the trains.
Transport spokesperson Val Shawcross said: “With the taxpayer picking up the full cost of these new trains, it is even more important that the contract is awarded to a UK based company. This is often the case across Europe.
“It is critical that we support skilled manufacturing jobs in the UK. We need to maintain and develop companies that have the skills and experience to deliver this kind of contract. Once those skills have gone it will be very difficult to get them back, and the UK will be in a weaker position for winning overseas contracts in the future.”
Transport unions have welcomed news that the trains will be fully publicly owned.
TSSA leader Manuel Cortes said: “We welcome the fact that Tory ministers recognise that it is cheaper and quicker to have publicly-funded new trains for Crossrail”.