Edinburgh's tram line could be cut drastically short amid continuing fears over the spiralling cost of the project.

A report to go before city councillors next week details a series of contingency plans which could see officials borrow an additional £54m to get work restarted. It follows the admission that the project, originally estimated to cost £375m, is likely to reach a cost of £545m. Officials are also looking into the possibility of cancelling the contract with German firm Bilfinger Berger, which is building the line.

However, even if officials do vote to borrow more cash to save the ailing project, it remains unclear whether the full line will actually be built as planned. Those behind the project could also opt to introduce a "phased plan for delivery" which would mean only the line from the depot at Edinburgh Airport to Haymarket would open initially.

Once the western end of the line was being used by passengers, work would then be completed to York Place, then Leith Walk, then Ocean Terminal, before finally reaching the planned end of the line at Newhaven on an undisclosed date.

TIE and Edinburgh City Council insisted the report, which was made public on Friday, was simply detailing a number of possible options to enable the project to go forward.

The city's Transport Convener, Gordon Mackenzie, said: "As a public body, the Council must prudently manage any risk and the directors’ suggestion of adding a 10% contingency figure is reasonable to work with as we look at our various options.

"Of course, if we were not in dispute with the contractor there would be no need to do this. While signs of progress at the west of the city, tram vehicle production and the finalisation of utility works are welcome, we are by no means in the position we would like to be. I am fully-supportive of the lengths TIE’s management have gone to in trying to resolve the contractual dispute against a background of continual frustration and public scrutiny."

TIE Chairman David Mackay, added: "We are not seeking additional funds from the Council at this stage. We have indicated that the dispute means we are unlikely to deliver Phase 1a within the funding envelope, however we will continue towards this goal.

"I am satisfied that we have exhausted all avenues to bring this dispute to a satisfactory conclusion and offered the contractor a range of options to do so. My team have stood firm in the negotiations with the protection of the public purse uppermost in their minds, but this has been a difficult process with one unwilling contractor.

"I welcome the Council’s support of our position and I hope to be able to announce significant progress in the coming weeks."

Officials also insisted that the ongoing row with the contractor had been worthwhile, claiming that by entering an official dispute, they had saved more than £10m in taxpayers money on Bilfinger Berger's additional cost demands.

However, SNP MSP and long-term tram critic Shirley-Anne Somerville said the situation had now gotten so bad, the only option left was to give Edinburgh's residents a referendum on whether to abandon the project before throwing "more good money over bad".

She said the council report was simply an official acknowledgment that the project had gone disastrously awry, telling STV News: "It's a final admission of something that anybody walking the streets of Edinburgh has known for some time. This project was never going to be delivered on time and on budget. My concern is that they're now looking for more funding for this, when that money could be spent on much more important projects such as affordable housing, which Edinburgh is very short of, or building new schools."

Ms Somerville also hit out at the council's plans to delay the opening of the majority of the line, saying: "Phased implementation is just another way of saying we're going to run out of money before the project finishes and I think there will be great anger, from the people of Leith in particular, if they have put up with two years of chaos and disruption and see nothing at the end of it."

Ms Somerville also questioned the legitimacy of blaming Bilfinger Berger for the state of the project, adding: "We simply don't know how much is the responsibility of the contractor.

"I've asked for the gagging clause in their contract to be lifted because they're not allowed to speak to the media and all we've had for a year is spin from TIE. I'm sure there's fault on both sides, but I don't think it helps anyone to suggest that everything that has gone wrong on this project is the fault of one contractor.

"This project was already behind schedule and over budget before Bilfinger Berger ever started laying the tram tracks."

Councillor MacKenzie insisted the report would allow for better understanding of the situation, adding: "This report brings much greater clarity to the people of Edinburgh regarding all aspects of the tram project. It also dispels some of the myths that others have used politically regarding potential levels of overspend."

However, Ms Somerville blasted: "The report doesn't include any costings so we still have no idea how much tram line we're getting for our money. I think it's outrageous that councillors will be given a paper to vote on when they don't have the figures. But one thing is for sure. If more money is given, there should be a commitment that this is the one and only time that TIE is allowed to come cap in hand to the council asking for money. This cannot continue."

She added: "I want the people of Edinburgh to be able to have their say in a referendum. And I think it's about time that the councillors and the MSPs who voted through this project apologised to the people of Edinburgh for the mess that they've left their city in and the damage they've done to their city's reputation."