Virgin to run West Coast route 'for at least nine months'
Virgin Trains will be asked to continue to run services on the West Coast Mainline for at least another nine months after the latest decision on the route franchise was scrapped.
Transport Secretary Patrick McLoughlin said the government will hold talks with Virgin for a temporary contract.
A competition will then be run for a new franchise deal.
Mr McLoughlin added the first findings of a review into what went wrong will be released by the end of October.
The decision to give FirstGroup the route from December was withdrawn after "technical flaws" in the bid process were discovered.
Three senior civil servants have been suspended and the government faces a bill of £40m to compensate franchise bidders.
A Virgin Trains spokesman said the move meant it was in a position to "offer customers some short-term continuity".
The competition to run the line was cancelled on 3 October and led to the suspension of other franchise programmes including bids for Essex Thameside, Great Western and Thameslink.
The government has announced two independent reviews to focus on the West Coast competition and the wider DfT rail franchise programme.
The flaws in the bidding were discovered as the DfT was preparing to contest a legal challenge by Virgin to the decision not to award it the contract.
Transport Secretary Patrick McLoughlin said: "My priority now is to fix the problem and the first step is to take urgent action to ensure that... services continue to run to the same standard and passengers are not affected.
"I believe Virgin remaining as operator for a short period of time is the best way to do this and my officials and I will be working flat out to make this happen."
Mr McLoughlin said he hoped the preliminary findings of one of two reviews he has launched into the debacle will be released by the end of this month.
The chief executive of energy firm Centrica, Sam Laidlaw, will investigate "what happened during the West Coast procurement, and why," said Mr McLoughlin.
He told the Commons: "I have asked for the initial findings of this [Laidlaw] review by the end of October and expect to have a full report by the end of November.
"It will establish the lessons to be learnt," he added,
The transport secretary added the second review, led by the chairman of Eurostar, Richard Brown, "will report no later than the end of the year on lessons for the future franchising programme, so that it can be resumed as soon as possible".
He warned the House: "Before these reviews have been completed... any speculation as to the nature of the flaws is just that... speculation".
The West Coast route serves 31 million passengers travelling between London, the West Midlands, the north-west of England, North Wales and the central belt of Scotland.
FirstGroup had initially beaten current operator Virgin Trains to win the 13-year franchise.
BBC News transport correspondent Richard Westcott said the interim contract will last for two years while the longer franchise will be handed out around the time of the next general election.
The decision was a "messy solution to a mistake that is costing the taxpayer tens of millions of pounds" but the transport secretary feels it is the best way to keep services running without disruption, our correspondent added.
Ahead of the announcement, Labour warned that a decision to extend Virgin's contract could see taxpayers exposed to further legal costs.
Shadow transport secretary Maria Eagle also said it was wrong for the investigation into the bid process to be carried by Mr Laidlaw, who is also a DfT non-executive director.
She told the Commons the whole saga was "a monumental failure of this shambles of a government".
RMT transport union leader Bob Crow described the decision to extend Virgin's franchise as a "shabby deal" but said it was "no surprise". The RMT had been hoping the West Coast franchise would be run by the DfT in the public sector.
Meanwhile, Manuel Cortes, leader of the TSSA rail union, said: "This decision means that the long-running Whitehall farce, known as private rail franchising, continues at the taxpayer's expense."