London Underground says it plans to award Ferrovial Agroman Laing O’Rourke the £500 million contract to design and build the proposed Northern line extension.
Backed by Wandsworth and Lambeth councils, the extension would create a spur from Kennington serving new stations at Nine Elms and Battersea.
The scheme forms part of the regeneration of the Nine Elms area and is expected to act as a catalyst for jobs, investment and regeneration.
Subject to the scheme getting final approval, construction could start in spring 2015 with the stations opening by 2020.
The estimated £1bn costs will be met by contributions from Battersea Power Station’s owners and a levy on other local developments.
London Underground Managing Director, Mike Brown, said: “This is an important step in ensuring the delivery of this vital extension which will significantly improve transport links in the area.
“It is vital that our proposal is delivered cost effectively for our passengers, taxpayers and the local Boroughs and developers who are helping to fund the extension.
“As our population grows faster than any other European city, the case for stable and sustained investment in London’s transport network has never been stronger.”
Wandsworth Council leader Ravi Govindia said: “It’s fantastic news that a contractor has been appointed and we are a step closer to achieving this vital tube link that we have been campaigning for so long. It will breathe new life into Nine Elms and yield billions of pounds in new economic growth and tax revenue.”