Rail bosses are considering five route options after the South West link was destroyed by storms.
Network Rail briefed MPs on the choices after the track was destroyed along the seafront route at Dawlish in Devon.
One option includes reinstating the Okehampton line - which closed in 1967 - at a cost of up to £700m.
The Dawlish track is due to be repaired by mid-April. A council leader said the line was like a "Peruvian rope bridge".
The track, which links Cornwall and much of Devon to the rest of the UK, was left hanging in the air after storms smashed the sea wall at Dawlish.
Network Rail's suggestions are:
- Reinstate the Okehampton line (between Plymouth and Exeter, via Okehampton), which closed in 1967. The estimated cost is £500m to £700m
- Create a new line connecting existing freight lines from Alphington (near Exeter) and Heathfield (near Newton Abbot)
- Three options between Newton Abbot and Exeter via Teignmouth (with new tunnels) - but the current level of trains via the Dawlish route could be maintained.
Railway bosses have also suggested making the existing coastal railway "more resilient".
The South West economy is losing £20m a day as a result of the track being destroyed, according to chambers of commerce in the region.
Rail companies are laying on buses and offering reduced fares. Extra flights are also running in and out of Newquay airport in Cornwall.
Tudor Evans, leader of Plymouth City Council, who compared the track to a "Peruvian rope bridge" after it was left dangling in the air, told BBC Devon: "We must have it back quickly.
"When those floods subside in Somerset we must make sure the interest in the South West does not go down at the same pace."
Torbay Mayor Gordon Oliver, who was with Mr Evans and other council leaders at a House of Commons Transport Committee meeting on Monday, said 75% of tourism businesses in Devon and Cornwall surveyed said bookings were down.
West Devon councillors have urged the government to support the reinstatement of the Okehampton line.
Deputy leader Bob Baldwin said: "We need to plant a stake in the ground that this route would be a safe alternative."
Network Rail said a report on the options would be on the desk of Transport Secretary Patrick McLoughlin in June and a formal shortlist would be published in the autumn.