City staff are proposing the elimination of two of the three stops on the proposed $3.5-billion Scarborough subway line.

Staff are set to release a report Thursday that outlines the proposed changes, sources told CBC News.

The new plan — which would offer a direct route from the Kennedy stop to the Scarborough Town Centre stop along McCowan Rd. — would mean $1 billion in savings and not take away potential ridership from Mayor John Tory's ‎proposed SmartTrack line, according to sources. 

Those savings would be invested in a new proposed Malvern LRT, envisioned as an extension of the Eglinton Crosstown LRT, which would run northeast from Ellesmere Rd. to the Malvern Town Centre, sources said.

"There's a plan coming forward that will deliver more transit for more people in Scarborough and do it in the existing funding envelope. The mayor will have more to say about it tomorrow," Amanda Galbraith, the mayor's director of communications, told CBC News in an email.

At a news conference Wednesday, Tory wouldn't confirm that subway stops were being removed but said there "will be
substantially more transit for Scarborough."

Two Scarborough-area councillors are excited about Thursday's report.

"The lifelong dream of many people in Scarborough to get a subway into the heart of Scarborough will come true and will be supported 100 per cent by city staff," Glenn De Baeremaeker, the councillor for Ward 38, told CBC News.

"Out in Scarborough, we've been saying, 'We deserve to have access to the subway system just like everybody else in the city.' and I think, finally, with the help of John Tory it's on its way," De Baeremaeker said.

Michael Thompson, councillor for Ward 37, said he was "pleased with the compromise that has been brought forth."

"While two stops have been eliminated, there is expanded ability into the heart of Scarborough for more residents to be able to have greater, efficient transit which is extremely important to them," Thompson said.

In Oct. 2013, council voted to extend the TTC's Bloor-Danforth line in Scarborough. The Scarborough Subway Extension would replace the aging Scarborough Rapid Transit (SRT) line with the understanding the province would contribute a minimum of $1.48 billion, the federal government would invest up to $660 million, and city council would commit $910 million.

The city would raise its portion of the funding through a combination of development charges and property tax hike.

That decision meant the subway would be extended three stops from its current eastern terminus at Kennedy Station to Sheppard Avenue East. 

It also meant the scrapping of a seven-stop LRT line, fully funded by the province, that had previously been planned to replace the SRT.