The Department for Transport has scrapped plans for a bidding competition for the franchise to run Great Western rail services.
The competition was one of three put on hold last October in the wake of the fiasco over the flawed awarding of the West Coast Main Line franchise.
Current operator First Great Western has had its contract extended until October and negotiations will start on a new two-year contract with the company, while plans for the longer term will be set out in the spring.
Meanwhile, operators of the two other franchises - Thameslink, Southern & Great Northern and Essex Thameside - will be offered interim two-year contracts while competitions are launched for longer-term franchises.
The department will grant a 28-week extension to the current Thameslink/Great Northern franchise operated by First Capital Connect after it ends in September and negotiate on a two-year extension. The franchise competition for a seven-year contract to run the service will be resumed. The competition for the Essex Thameside franchise, currently operated by c2c, will be resumed with a revised invitation.
The announcement was made in a statement to Parliament by Transport Secretary Patrick McLoughlin on the day of a highly critical report on the Government's handling of the £5 billion West Coast Main Line franchise competition.
FirstGroup was told it had won its bid to take over the franchise from Virgin Trains, but the decision was scrapped after the discovery of "significant technical flaws" in the way the procurement was conducted.
A committee of MPs said the Transport Department embarked on an "ambitious, perhaps unachievable" reform in haste, and claimed that ministers and senior officials were lied to.
Bob Crow, leader of the Rail, Maritime and Transport union, said: "The day the lid was lifted on the sordid fiasco on the West Coast the Government are at it again, doling out lucrative two-year contract extensions around the country with directly operated railways on hand to sweep up the mess if it all falls apart."
Manuel Cortes, general secretary of the Transport Salaried Staffs Association, said: "The latest announcement is merely a sticking plaster to try and save the franchise system, which is mortally wounded and bleeding to death before our very eyes... ministers would be better off scrapping the whole system and running the franchises in the interests of passengers rather than private shareholders."
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