THE contest to secure the right to run Great Western train services through Oxfordshire has today been scrapped and current operator First Great Western looks set to stay in charge until 2015.

The Department for Transport confirmed this morning that it was terminating the bidding process and taking up an option to extend its current contract with FGW until October, to allow talks to take place on a new two-year contract. Preliminary discussions with the train operator are already under way.

Proposals for long-term arrangements for the franchise will be announced in the spring.

The contest to win the right to operate Great Western rail services from July was suspended last autumn after the scrapping of award of the West Coast rail franchise to First Group - the parent company of FGW - following protests from Virgin, which faced losing the right to run trains from London to the West Midlands, the North West and Scotland.

A review uncovered serious flaws in the way the DfT had assessed the competing bids. Virgin was awarded a two-year extension to its franchise last month.

In a statement on the Great Western franchise and two other stalled bidding processes, including another First Group-run franchise, Capital Connect, Transport Secretary Patrick McLoughlin said: "These plans mark an important step on the way to restarting the franchising programme, and while I am determined this should happen as quickly as possible, we do need time to get this right.

"We have had to take some tough decisions regarding franchising, and while they may provide a challenge in the short term, I believe the lessons we have learned will help deliver a more robust system in the future, benefiting fare payers and taxpayers alike."

Mr McLoughlin said he had taken the decision about Great Western after rail executive Richard Brown, who carried out a review of the failed West Coast bidding process, said the proposed structure of the GW franchise was not the right one while major work to electrify and resignal the route - including services between Oxford, Didcot and London Paddington - and introduce new trains takes place over the next five years.

Tim O’Toole, the chief executive of First Group, said: “The extension of First Great Western and First Capital Connect provides continuity and consistency for our passengers and enables us to continue to deliver considerable improvements to services."

He added: “We have also taken significant steps to tackle overcrowding, although there is still much to do on these routes which are among the most congested in the country. Today’s announcement will also allow us to work closely with the DfT and our industry partners to deliver the much-needed new capacity as efficiently and effectively as possible.”

Despite agreeing to compensate First Group and Virgin for costs incurred in the West Coast bidding process, the DfT is refusing to do the same for the Great Western bidders, who are understood to have spent millions of pounds.

First Group was bidding for a new 15-year franchise in competition with Stagecoach, National Express and Arriva, a subsidiary of the German state rail company Deutsche Bahn, which runs Oxfordshire's two other train operators, Chiltern Railways and CrossCountry.