Oxford could get a new train service to London, via Bicester, under a £200m plan drawn up by Chiltern Railways.

Chiltern's scheme, developing an idea it first suggested several years ago, would complement the East-West Rail Consortium's proposals to upgrade the Oxford-Bicester Town line and reopen the route from Bicester to Milton Keynes.

A new quarter-mile-long west to south connection would be built to link Bicester Town station with the Chiltern Line at a junction on the southern outskirts of the town, along with a new station alongside the Water Eaton park-and-ride site on the outskirts of Kidlington.

Chiltern Railways' chairman Adrian Shooter said that if the scheme was approved, it would make Bicester one of the best connected towns in the country, with four direct trains to London every hour - two from Bicester Town and two from Bicester North station, on the route to Banbury and Birmingham.

Two trains an hour would run between Oxford and London Marylebone, via an improved and expanded Bicester Town, in addition to the four trains an hour - two expresses and two stopping services - which First Great Western runs to London Paddington.

Chiltern says the journey to London would take about 65 minutes, compared with 55 minutes on FGW.

Double track and new signals between Oxford and Bicester would allow more than 30 trains a day to run each way, compared with seven at present, with journey times cut from 26 minutes to 14. Some trains would also serve Islip.

The new link would give Oxford direct services to Wembley Stadium station and reinstate a rail connection with High Wycombe for the first time since 1964.

The service could be running in time for the 2012 Olympics in London and would strengthen the case for the Oxford-Milton Keynes line.

Alison Mathias, of Oxford commuter group Ox Rail Action, said: "We're delighted. This would give us more choice and more service and put pressure on First Great Western to up their game. FGW have improved their service in recent weeks, but this would put pressure on them to do even better."

Bicester Chamber of Commerce chairman Ben Jackson said: "This would put us at the top of the pile in terms of connectivity."

Chiltern still needs to get Government approval but is confident work could start within two years, allowing it to meet the 2012 target.

Mr Shooter said: "We have done a lot of work to develop this plan. It will greatly improve connections between London, Oxford and Bicester."