This agreement ensures the continuation of public transport in the capital until May 28.
The collapse in passenger numbers during the coronavirus pandemic has decimated TfL’s finances, leading it to require Government funding to keep services running.
A TfL spokesman said: “We continue to discuss our funding requirements with the Government and hope these discussions can be concluded successfully soon, to enable a strong and robust recovery from the pandemic.
“We have today agreed with the Government that our existing funding agreement will be extended until Friday May 28 so that these constructive discussions can be concluded.”
A Department for Transport (DfT) spokesman said: “The Government is committed to supporting London’s transport network through the pandemic, and has already provided more than £3 billion in emergency funding to TfL.
“We continue to discuss any further funding requirements with TfL and the mayor, and all additional funding provided will continue to move TfL onto a more financially sustainable footing.
“We have agreed to roll over the existing funding deal until May 28 on the same terms as now whilst a longer term funding offer is made.”
Mick Lynch, general secretary of the Rail, Maritime and Transport (RMT) union, said the “continued uncertainty and reliance on short-term fixes will simply hold back our economic recovery causing lasting damage”.
He added: “We need the Government to stop using London transport as a political football, and guarantee it the long-term funding it needs as we move out of lockdown.”
The latest DfT figures show passenger numbers on TfL’s Tube and bus services last week were at 35% and 60% of pre-pandemic levels respectively.
Prime Minister Boris Johnson has accused his successor as London mayor, Sadiq Khan, of “blowing” TfL’s finances through an “irresponsible fares policy”.
TfL insists it was on the path to achieving an unprecedented level of financial self-sufficiency until the pandemic significantly reduced its fares revenue.