Wandsworth Council are planning to fund the Northern Line extension through an Enterprise Zone.
The proposal would see the council using surrounding business rates revenue to fund the extension of the Northern Line to Battersea.
It is the first time this scheme has been used in England, which could set a new model for financing future transport schemes.
The proposal involves the Greater London Authority (GLA) borrowing up to £1bn to pay for the tube extension, with a repayment guarantee provided by the UK Government.
Loan repayments would be made through contributions by local developers collected through the Community Infrastructure Levy.
It would also be repaid in business rates revenue within a new Nine Elms Enterprise Zone, which includes the regeneration areas key development sites.
The zone would stay in place for a minimum of 25 years, with the funding sources expected to complete the repayment of the loan.
Wandsworth Council, Lambeth Council and Transport for London (TfL) would have to agree on the plan before it goes ahead.
Councillor Ravi Govindia, leader of the council, said: "This project could represent a major breakthrough in the way we pay for vital infrastructure projects in this country.
"We plan to use an enterprise zone as a funding tool for a major transport upgrade, which in turn, will create new growth, new jobs, and even greater tax receipts in the future.
"It would give Battersea its first underground station and help bring an underused part of the Thames riverside back to life."
There will be two new stations and a new Tube tunnel created, with the Charing Cross branch of the Northern Line extended between Kennington and Battersea Power Station.
A station will be built in Wandsworth Road and another at Battersea Power Station.
Councillors will vote on the proposal at the strategic planning and transportation overview and scrutiny committee on February 20.
A final decision will be made by the council's executive on March 4.