(Reuters) - The British government is offering Transport for London (TfL) a further 1 billion pounds bailout with demands that the transport operator raise fares and curb the remaining free travel entitlements for children and pensioners, a source familiar with the matter said on Thursday. TfL, which runs the city’s transport system, has been told by ministers to introduce the reforms if it is to secure a bailout package, the source added. “Negotiations are ongoing to do a deal to keep TfL services running”, the source from the office of London Mayor Sadiq Khan said, adding certain demands will be “totally unacceptable” to Khan. The source asked not to be identified. Sky News reported earlier that the government was demanding the extension of London’s congestion charge zone as a part of the bailout proposal. “Conditions such as extending a £15 congestion charge to the North and South Circular and taking free travel away from children and older people would be totally unacceptable to the mayor”, the source said. TfL’s income was down by 90% because people avoided public transportation at the height of the novel coronavirus pandemic between March and July. It was bailed out by the central government when its finances came under pressure in the crisis. “We continue to discuss our immediate funding requirements with the government and hope these discussions can be concluded successfully soon,” a TfL spokesman said. “We are doing what we can to minimise costs and aim to continue operating a full service across our network while our funding discussions continue.” The Department of Transport did not immediately respond to a request for comment. Last month, Khan called for a 5.7 billion pounds bailout package for TfL to keep the capital’s transport system going for the next 18 months.