West Coast main line rail franchise to FirstGroup award decision has been cancelled, and the Government says the bidding process should be run again.
Ministers say each bid were way to calculated risk "significant technical flaws".
They also ordered two independent reviews what happened in.
FirstGroup, the current operator Virgin Trains 13 years to win the deal to beat, said that its bid was submitted correctly and was disappointed at the "news".
Writing on his blog, adding that Virgin founder Sir Richard Branson that Ministers "now that Virgin Trains West Coast main line running should take will accept" expected move,.
BBC transport correspondent Richard Westcott's decision to scrap the deal ahead of the implications of the West Coast main line was just added.
Before the next general election and the whole process could be thrown into doubt now franchising to be decided almost 15 rail franchises were due, he said.
' Deeply sorry '
August announced that FirstGroup-on line train services will take a UK's busiest-in December the Virgin, the franchise has gone since 1997 the legal challenge had been sparked.
Continue reading the main story
Analysis
BBC transport correspondent Richard Westcott's Richard Westcott
Charges ever since they first group to contract Ministers under fire picking only the highest bidder.
The implications of this mistake West Coast contract go way beyond. nearly 15 multi-billion pound rail deals up for grabs before the next general election, and the whole process can throw doubt into franchising.
The Government launched two urgent reviews - the first will examine what went wrong with the West Coast. The second bid process will look at the franchise.
In the meantime, Ministers ask the Virgin Trains in the event of abusive, while they sort out this mess will be forced to keep going.
It was introduced by Virgin Trains now in the High Court judicial review would fight the bidding process to run again due to the Transportation Department said.
And said that it was investigating, while an announcement will be made about the suspension of employees.
Transportation Secretary Patrick McLoughlin "deeply regrettable and totally unacceptable" mistakes made by your description of the Department.
He said: "what happened to a detailed examination of these flaws by my authorities, and this award competition was held for a new franchise is no longer acceptable.
"West Coast travelers of the future we want to resolve, while trains that now run the same software, the same staff and timetables plan will continue to run as that can rest assured."
He said that a review would check how West Coast franchise competition gone wrong, and what lessons can be learned.
Other reviews for extensive rail franchise program will take in the Department, he said.
"Frank Declaration '
FirstGroup said that unless it was for the Department of transportation is "no signal" had no problem with the franchising process.
"We have to learn this news, and DfT investigation results are extremely disappointed to wait," the company said.
"It's clear to us that DfT we in no way fault, due process followed properly. we have a strong bid, in good faith and in accordance with strict conditions DfT."
In a statement, it described the Virgin trains as transport Secretary "Frank" that competition was flawed.
It said: "we are travelers, taxpayers and all bidders, in the interests of better a franchising system helps you to review aid to play a full role."
Labour MP Louise Ellman, Chairman of the Commons transport Select Committee, described it as "absolutely stunning".
He said: "I just what has gone wrong on the question to the Secretary of State and transport Select Committee's Permanent Secretary is going to remember.
"It really is a major issue and a major accident."
Learning that his firm has lost a bid in August after Sir Richard, he was convinced that civil servants "their math was wrong."
He asked so that the process can be reviewed to sign contracts that can be delayed.
But what he described "as the process of consolidation" Justin greening, who was transport Secretary Time, rescue.
Ministers say each bid were way to calculated risk "significant technical flaws".
They also ordered two independent reviews what happened in.
FirstGroup, the current operator Virgin Trains 13 years to win the deal to beat, said that its bid was submitted correctly and was disappointed at the "news".
Writing on his blog, adding that Virgin founder Sir Richard Branson that Ministers "now that Virgin Trains West Coast main line running should take will accept" expected move,.
BBC transport correspondent Richard Westcott's decision to scrap the deal ahead of the implications of the West Coast main line was just added.
Before the next general election and the whole process could be thrown into doubt now franchising to be decided almost 15 rail franchises were due, he said.
' Deeply sorry '
August announced that FirstGroup-on line train services will take a UK's busiest-in December the Virgin, the franchise has gone since 1997 the legal challenge had been sparked.
Continue reading the main story
Analysis
BBC transport correspondent Richard Westcott's Richard Westcott
Charges ever since they first group to contract Ministers under fire picking only the highest bidder.
The implications of this mistake West Coast contract go way beyond. nearly 15 multi-billion pound rail deals up for grabs before the next general election, and the whole process can throw doubt into franchising.
The Government launched two urgent reviews - the first will examine what went wrong with the West Coast. The second bid process will look at the franchise.
In the meantime, Ministers ask the Virgin Trains in the event of abusive, while they sort out this mess will be forced to keep going.
It was introduced by Virgin Trains now in the High Court judicial review would fight the bidding process to run again due to the Transportation Department said.
And said that it was investigating, while an announcement will be made about the suspension of employees.
Transportation Secretary Patrick McLoughlin "deeply regrettable and totally unacceptable" mistakes made by your description of the Department.
He said: "what happened to a detailed examination of these flaws by my authorities, and this award competition was held for a new franchise is no longer acceptable.
"West Coast travelers of the future we want to resolve, while trains that now run the same software, the same staff and timetables plan will continue to run as that can rest assured."
He said that a review would check how West Coast franchise competition gone wrong, and what lessons can be learned.
Other reviews for extensive rail franchise program will take in the Department, he said.
"Frank Declaration '
FirstGroup said that unless it was for the Department of transportation is "no signal" had no problem with the franchising process.
"We have to learn this news, and DfT investigation results are extremely disappointed to wait," the company said.
"It's clear to us that DfT we in no way fault, due process followed properly. we have a strong bid, in good faith and in accordance with strict conditions DfT."
In a statement, it described the Virgin trains as transport Secretary "Frank" that competition was flawed.
It said: "we are travelers, taxpayers and all bidders, in the interests of better a franchising system helps you to review aid to play a full role."
Labour MP Louise Ellman, Chairman of the Commons transport Select Committee, described it as "absolutely stunning".
He said: "I just what has gone wrong on the question to the Secretary of State and transport Select Committee's Permanent Secretary is going to remember.
"It really is a major issue and a major accident."
Learning that his firm has lost a bid in August after Sir Richard, he was convinced that civil servants "their math was wrong."
He asked so that the process can be reviewed to sign contracts that can be delayed.
But what he described "as the process of consolidation" Justin greening, who was transport Secretary Time, rescue.