Sir Richard Branson's rail company Virgin Trains will carry on running services on the West Coast main line, which runs through Crewe and to Liverpool and Manchester, for a further 23 months, it has been announced.
Virgin had been set to lose the West Coast franchise it has operated since 1997.
But the Government scrapped the bidding after Department for Transport (DfT) faults were found with the bidding process.
The temporary deal, announced by Transport Secretary Patrick McLoughlin, will see Virgin carry on with the London to Scotland route until November 9, 2014 - after which the West Coast line will be let under a long-term franchise.
Mr McLoughlin said: "We are determined to ensure not only that passengers continue to experience the same levels of service they have in the past, but that services improve. There will be a new hourly service linking Glasgow and London and we will also work with Virgin Trains to explore other service improvements."
He went on: "I am also extremely pleased that passengers will benefit from up to 28,000 more seats daily thanks to the delivery of 106 new Pendolino carriages on to the West Coast line which has happened on budget and ahead of schedule."
The Government announced that the DfT would be able to shorten the 23-month period "by up to six months if a subsequent franchise can be let on a shorter timescale".
Virgin had high hopes of extending its long tenure on West Coast when bids were invited for a new 13-year franchise which was due to start on December 9 this year.
But in August the DfT announced the new franchise had gone not to Virgin but to rival transport company FirstGroup.
It was only after Sir Richard, who had branded the bidding process "insane", mounted a legal challenge to the decision that Mr McLoughlin scrapped the bidding process, saying there had been mistakes by the DfT.