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The council has said JCDecaux has "preferred bidder status".

A borough council spokesman confirmed that the deputy leader of the council, councillor Tony Page, said at a committee meeting last week that the state of the bus shelters was "disgraceful and a real disincentive" to passengers.

JCDecaux is now in exclusive talks with the council for the bus shelter contract, but the two parties are yet to agree final terms.

A report by the borough's director of transport, environment and sport said there had been a lack of "pro-active engagement" and "high quality maintenance regime" from Clear Channel and referred to "difficulties securing additional shelters".

However, Clear Channel has asked Reading to re-examine its service records. Rob Atkinson, acting chief executive of Clear Channel Outdoor, said: "We believe there has been a mistake. We have always provided a high quality maintenance regime, as shown by the quarterly council meeting reports and official monthly updates."

Clear Channel also disputes that Reading has had difficulties securing additional shelters. Atkinson said: "Reading Borough Council has not requested any additional bus shelters, despite being offered them by Clear Channel."

Atkinson said there were 60 bus shelters owned and maintained by the council, which were in very poor repair and although Clear Channel had offered a full maintenance programme for these shelters in 2007, the proposal was not taken up by the council.

The JCDecaux bid includes £80,000 to cover the cost of reinstalling bus shelters across the borough. Atkinson said Clear Channel would have been happy to continue to provide and maintain the existing bus shelters at no cost to council tax payers, and proposed this to the council in the light of current economic circumstances.

Atkinson said Clear Channel would be "closely scrutinising the tender process, in the light of these comments at the council meeting last week, and shall be seeking an urgent meeting with the council".