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Toronto mayor Rob Ford (right) with Councillor Gloria Lindsay Luby who joined the majority who voted in favour for the hotly contested light rail transit on Sheppard Avenue East at Toronto City Hall on March 22, 2012.Michelle Siu for The Globe and Mail

Toronto Mayor Rob Ford has unofficially kicked off his re-election bid, vowing to take his fight for subways to the taxpayers after a stinging defeat at city council Thursday.

"This is an election issue," Mr. Ford declared. "Obviously the campaign starts now and I'm willing to take anyone on, streetcars against subways in the next election. I can't wait for that."

City council voted 24-19 in favour of building a $1-billion light-rail line on Sheppard Avenue East, scuttling Mr. Ford's promise of a subway to Scarborough.

The decision came despite Mr. Ford making two passionate pleas for underground transit on the second day of a special transit meeting.

In one of his most animated speeches since taking office, Mr. Ford shouted: "People hate the St. Clair. They hate these streetcars. You can call them what you want. People want subways, folks. Subways, subways. They don't want these damn streetcars blocking up our city."

The mayor had earlier urged council to postpone the vote until after the federal and provincial budgets are delivered next week to see whether senior governments would contribute more money to public transit in Toronto.

That motion failed by a vote of 18 to 24.

Councillor Gord Perks, an opponent of the mayor, said deferring the decision would have pitted Torontonians from different corners of the city against one another. "And why? So we can have additional months of mindless campaign rhetoric designed to split Toronto apart."

City councillor spent the meeting debating how to spend the last of an $8.4-billion public transit purse from Queen's Park. Ottawa has also committed $333-million to the Sheppard LRT.

"It all comes down to money, right. We'll see what the finance minister says, we'll see what the premier says. At the end of the day it's their money," Mr. Ford told reporters. "I'm going to do what the taxpayers want me to do. A lot of people told me they don't want anything. If they're going to get an LRT, if they're going to get train tracks down the middle of the street in Scarborough, they don't want anything."

City council voted in favour of extending the Sheppard subway to Morningside Avenue with an above-ground light-rail line funded by Queen's Park and Ottawa, reviving a project begun under former mayor David Miller.

The decision was the latest evidence of Mr. Ford's slipping grip on city council, which already this year has swept his allies off the Toronto Transit Commission, revived most of his predecessor's light-rail network and watered-down his budget.

Council would not even allow Mr. Ford's budget chief, Mike Del Grande, to withdraw from the floor a motion in favour of a parking levy Thursday morning.

In his speech, the mayor warned the light-rail network would be a disaster.

"This is going to be a boondoggle of billions of dollars that makes the eHealth scandal look miniscule," he said.