Virgin Rail will continue running the troubled West Coast Main Line, which runs through Lancaster, while the future of the route is decided.
The Government is in talks with Sir Richard Branson’s group about remaining the operator of the line for “between nine and 13 months” while a competition is run for an interim franchise agreement.
Monday’s move comes after a Goverment U-turn over the decision to award the contract to FirstGroup, after it found “significant technical flaws” in its own bidding process.
Morecambe and Lunesdale MP David Morris said: “It is good to see that the Government do take note of the people and Parliament in calling for a review and a more scrutinised bid process.
“I will continue to ask the Government questions about the West Coast and have also in the last week met with both Virgin Trains and First.”
Transport Secretary Patrick McLoughlin said: “The cancellation of the InterCity West Coast franchise is deeply regrettable and I apologise to the bidders involved and taxpayers who have a right to expect better.
“My priority now is to fix the problem and the first step is to take urgent action to ensure that on December 9 services continue to run to the same standard and passengers are not affected.”
The original decision would have seen First Group take over running the London to Scotland service on December 9 with staff at Lancaster station moving to First.