Sir Richard Branson's train company is set to carry on running the West Coast Main Line, which connects London with cities in the West Midlands, the North West, north Wales and Scotland, for the time being, following a Government decision.
Virgin Trains had lost out to rival transport company FirstGroup in the battle to operate a new 13-year West Coast franchise.
But with Sir Richard mounting a legal challenge to the Department for Transport (DfT) decision, the Government scrapped the franchise competition earlier this month after "significant technical flaws" were found in the franchise process.
FirstGroup had been due to take over services on the line from December 9. On Monday, Transport Secretary Patrick McLoughlin said the DfT would negotiate with Virgin for the company to continue running West Coast services for a short period - expected to be between nine and 13 months - while a competition was run for an interim franchise agreement.
This interim agreement, which would be open to any bidders, would then run until the new long-term West Coast agreement was ready to commence.
Mr McLoughlin said Virgin remaining as an operator for a short period was the best way forward while Virgin said it would be working hard to "continue to provide a good service".
But rail unions, which had hoped the Government would run West Coast in the public sector after December 9, slammed Mr McLoughlin's decision. RMT leader Bob Crow said: "This announcement is no surprise. The Government are ideologically opposed to public ownership of the railways and, in collusion with the private train operators, have stitched up a shabby deal that will enable them to rerun the whole franchise fiasco in a year's time."
FirstGroup said: "We believe the private sector provides the most effective and efficient way to deliver passenger rail services in the UK.
"We await the outcome of the independent investigations into the West Coast franchise competition and the wider rail franchising process, which we hope will provide a greater degree of certainty and confidence not only to future bidders but to employees, stakeholders and the travelling public too."
A Virgin Trains spokesman said: "Our customers have made clear they want us to continue our excellent service and we now have the chance to deliver that and offer customers some short-term continuity. We will now be working hard to make sure we continue to provide the service that has made us successful. We are grateful for the fantastic support from customers and staff over recent months."