A subway into Scarborough now appears to be threatening a separate proposed transit line amid confused and contradictory debate at city council over how to pay for the new subway.

In a series of heated exchanges on Tuesday over replacing a light-rail plan in Scarborough with a subway, Mr. Ford offered a new way to fund the expansion line. He told surprised councillors that he had been told by Finance Minister Jim Flaherty that $333-million in federal money Ottawa had previously said was for a Sheppard LRT is actually available for any transit purpose selected by the city.

Mr. Ford later reversed his stance – saying that the Sheppard money was "committed.`` However, a representative for federal Finance Minister Jim Flaherty confirmed Mr. Ford's initial position is true – the funds are not earmarked for Sheppard specifically.

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The back-and-forth came as council debated, in a marathon session going strong as the evening wore on, whether to affirm support for the fully funded light rail plan or push for a subway. Fireworks were sparked at council after the mayor moved a motion that could lead to a subway in the east end of Toronto.

"I'm doing exactly what the people of Scarborough want me to do," Mr. Ford said.

The mayor was quickly put on the defensive as critics accused him of not understanding his own position.

In an extraordinary display, Councillor Josh Matlow squared off with Mr. Ford for asserting repeatedly that LRTs involve ripping up roads. In fact, the Scarborough line would run on a right of way in a corridor separate from traffic. "Do you know about the line we're debating today?" Mr. Matlow demanded.

Mr. Ford floated several times the theory that the money announced by Ottawa for a Sheppard LRT is actually available for any transit purpose selected by the city.

The revelation plays into the fears of councillors who are concerned that Mr. Ford – long an opponent of surface transit – will sacrifice other projects to pay for the subway. Councillor Joe Mihevc tried in vain to secure assurances from the mayor that a Scarborough subway project would not ruin plans for Sheppard. The councillor, who said he generally backed the plan to bury the line, worried about "a backdoor attempt on your part to kill the Sheppard LRT."

Adding to the confusion, Mr. Ford came back into the chamber after a recess and directly reversed his previous statement, saying that "the 333 is committed to Sheppard."

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He later put out a statement saying that the subway was seeking new funding. "The $333-million is set aside for Sheppard, that is where this money should stay – we need new funding," the statement read.

A representative for Mr. Flaherty confirmed in an e-mail, though, that the $333-million "is not allocated to any specific project, at this time" and they "are currently waiting for proposals." Such a development would appear at odds with a press release http://www.pm.gc.ca/eng/media.asp?id=2574// put out in 2009 by Ottawa, touting federal support for the Sheppard LRT. And it contradicts a spokeswoman for Metrolinx, the provincial transit agency, who said that the master agreement the city signed dedicates this money to Sheppard.

A series of heated exchanges eventually ended when the Speaker cleared the chamber to let tempers cool. When the politicians returned, Mr. Ford confirmed that the Scarborough would be "dead" if the federal and provincial governments don't come up with funding.

Toronto transit chief Andy Byford earlier warned councillors considering a Scarborough subway that they need to be careful not to miss the "bigger picture," pointing out that such an expansion would bring with it crowding problems and extra costs.

The CEO, speaking to reporters after the initial debate at city hall on rethinking the plan for above-ground transit in Scarborough, said he always favours subways if they can be afforded , but noted that money is "finite."

With an extension of the Bloor-Danforth line expected to increase ridership, Mr. Byford said it would be necessary to move up unbudgeted signalling upgrades and make the long-floated idea of a downtown relief line even more urgent.

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A new subway route taking pressure off the Yonge line has been discussed for decades, but never got past the planning stage. It is among the "next wave" of projects proposed by Metrolinx, though the plan is currently unfunded and the completion date far in the future.

"The need for a downtown relief line has not gone away," Mr. Byford said. "If you add to the numbers on the Bloor-Danforth, that need becomes ever-more compelling."

When asked whether spending money on a Scarborough subway when the relief line has long been identified as the top priority could be justified, he said it was a decision for council.

Councillor DenzilMinnan-Wong, a member of the mayor's executive committee, has come out swinging against a Scarborough subway, calling it a "vote-buying exercise" that could leave Toronto taxpayers on the hook for billions in cost overruns.

"To go forward with this is wrong on so many different levels," said Councillor Minnan-Wong, who has not ruled out a run for mayor in 2014. "Fiscal conservatives will have to turn in their membership cards."

Other senior city staff put on the hot seat included chief planner Jennifer Keesmaat, who came out in favour of an LRT.

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Ms. Keesmaat prefaced her statement with a careful reference to planning and city-building. "Based on the criteria that we have ... the LRT is in fact more desirable," she said.

The change from LRT to subway, which would cost the city an estimated $1.1-billion, is supported by Mayor Rob Ford and TTC chair Karen Stintz.

Deputy Mayor Doug Holyday, who is currently running for a provincial seat in the Etobicoke-Lakeshore by-election, said that if the province cuts wasteful spending, there will be plenty of funding available for projects like the Scarborough subway.

"I know that any government's got waste in it and we've got to find it," Mr. Holyday said, adding he was confident the federal government will pony up their share of the bill.

"The mayor met with Jim Flaherty at my headquarters. I think there's a great possibility – a very, very good possibility – the federal government will come up and do exactly what we need," he said.

He also said he did not believe cancelling the LRT would result in $85-million in sunk costs, despite the city manager's report stating as such.

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The city and the province agreed last year to replace the Scarborough RT with a $1.8-billion light-rail line that the province would finance. The change of heart by the provincial Liberal government comes after pressure from Ms. Stintz and their own Scarborough MPPs. The subway is estimated to cost $1.1-billion more than the LRT.

After the meeting Tuesday, TTC chair Karen Stintz said she still felt confident the subway proponents had the vote, but wanted to be clear the federal money for the Sheppard LRT would not be redirected.

"We have it in writing. I think there was just some confusion. It has to be new money if this project is going to proceed," she said, adding she supports the motion that stated the federal and provincial government must meet certain funding requirements in order for the subway development to go forward.

"When you look at the extension of the Yonge University Spadina line, the federal government is a one-third partner and that's the kind of model I think we should be pursuing."