THE privately financed Waratah train project will be forced into full state ownership, with taxpayers kicking in $175 million to guarantee the delivery of 70 remaining trains for Sydney's overstretched rail system.

The $3.6 billion public-private partnership was ''within hours of going under'', Treasury sources told The Sun-Herald yesterday. Just six of the 78 Chinese-made trains have been delivered and the project is 18 months behind schedule.

Delays ... passengers alight from a Waratah train at Circular Quay. The financially troubled project is 18 months behind schedule. Credit:Simon Alekna

But unlike the spectacular financial collapses of the Cross City Tunnel and the Lane Cove Tunnel - which did not burn taxpayers - the state government decided it could not stand by and let the Waratah project sink.

''It would have cost hundreds of millions of dollars and commuters would have been waiting another five years for the trains they need,'' a senior government source said.