Auckland's $98 million public transport ticketing project is in deep trouble, with an admission that a technology supplier to the Super City's largest bus fleet expects to miss a crucial deadline.

Concern about delays by Snapper Services, supplier of cards and machine readers to its sister company NZ Bus, in making the technology compliant with the Hop ticketing project on about 650 buses has exploded into a strong ultimatum from Auckland Transport lawyers.

The council body says it is suffering significant costs because of Snapper's failure to deliver a side deal to an $87 million supply and operations contract with French technology giant Thales, which has completed its major part of the long-awaited project ahead of time.

Labour's transport spokesman, Phil Twyford, blames the "shambles" - disclosed by a letter sent to Snapper by Auckland Transport's lawyers - on Government interference that let the company work on the scheme despite failing to win the main contract.

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"It was the National Government that insisted Snapper be allowed to roll out their card in Auckland well before the implementation of the integrated system," he said yesterday.

"That has led to the delays that are costing the taxpayers hundreds of thousands of dollars every month."

His reference was to extra potential costs on top of a Government funding commitment of $56 million and $42 million from Auckland ratepayers for the scheme, from which the Transport Agency hopes to extend "back-office" functions to other cities.

Auckland Mayor Len Brown said last night that Snapper's alleged failure was "not good enough" and he expected it to honour its obligations to the region's public transport users.

"Aucklanders have waited for integrated ticketing for too long," he said.

Transport Minister Gerry Brownlee, who has previously indicated NZ Bus could lose at least $70 million in annual subsidies from the Government and Auckland ratepayers if it fails to install compliant machines by November 30, would not comment.

A spokesman said the minister had been unaware until yesterday of the Auckland Transport lawyers' letter.

The lawyers have put Snapper, a subsidiary of Infratil, on notice of recovering costs of retaining Thales experts to ensure NZ Bus' electronic ticketing is fully inter-operable with trains and ferries by the deadline.

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In the letter sent to Snapper early last week, they have estimated an extra cost of $494,000 in total for June and July, rising to $627,000 a month from August.

On top of that, they have served notice of recovering from Snapper an extra cost of about $1 million for replacing more than 100,000 cards which it has issued to NZ Bus passengers over the past year.