Over 400 jobs could be lost at the AA insurance call centre in Cardiff.
The company blames a growth in online transactions resulting in fewer purchases made by telephone.
But the Cardiff-based AA Driving School and BSM activities will be retained, with around 150 jobs preserved.
The AA says future insurance call centre activity will be focused at its Newcastle office.
– AA Spokesperson
The AA is committed to making every effort to reduce the number of roles affected and will seek to do so by firstly considering alternative options raised during consultation, requests for voluntary redundancy, redeployment and / or relocation, and offering outplacement support and retraining.
The company says it expects to see a net reduction in its UK call centre staff of about 317 employees. Currently just under 3,000 of its total 8,000 staff work in call centres.
A consultation period is underway.
The decision to scrap plans to award the West Coast Main Line franchise to FirstGroup have been strongly criticised by a North Wales MP.
"To announce something at 12.32am in the first place of such significance to my constituents and people in North Wales is quite frankly scandalous," says Labour's David Hanson, MP for Delyn.
"I think this is a fiasco of monumental proportions from the Government."
"It might be the right decision - we did have some concerns over the loss of the route by Virgin - but the way the Government have handled this needs some answers urgently."
Today it emerged that three Department for Transport (DfT) officials have been suspended after Transport Secretary Patrick McLoughlin laid the blame for the fiasco "wholly and squarely" on the DfT.
A DfT spokesman said: "Three officials involved in the West Coast franchise competition were today suspended by the Permanent Secretary while the full facts are established. No further details will be issued at this time about the suspensions."
Virgin Trains has released a statement welcoming the Department for Transports decision to cancel the competition to run trains on the West Coast Main Line.
– VIRGIN TRAINS
We welcome today's frank announcement by the Secretary of State, acknowledging the flaws in the way the InterCity West Coast competition was assessed and launching a review into franchising more widely.
We are ready to play a full part in assisting the review to help deliver a franchising system that better serves passengers, taxpayers and the interests of all bidders.
In the meantime, we will assist the Department for Transport in ensuring continuity of service for the millions of customers who depend on train services on the West Coast mainline.
FirstGroup said that until it was notified by the DfT last night, it had no indication there were any problems with the franchise process.
Until this point we had absolutely no indication that there were any issues with the franchise letting process and had received assurances from the DfT that its processes were robust and that it expected to sign the contract with FirstGroup soon.
We are extremely disappointed to learn this news and await the outcome of the DfT's inquiries.
The DfT has made it clear to us that we are in no way at fault, having followed the due process correctly.We submitted a strong bid, in good faith and in strict accordance with the DfT's terms.
The Department for Transport has tonight announced that the competition to run trains on the West Coast Main Line has been cancelled. Transport Secretary Patrick McLoughlin announced that there has been a discovery of significant technical flaws in the way the franchise process was conducted.
Virgin Trains had held the contract, which operates from Holyhead in north Wales to Euston, for the past 15 years. Virgin Trains rival FirstGroup had been awarded the contract and remained confident that they would take over the running of the service in December.
– TRANSPORT SECRETARY PATRICK MCLOUGHLIN
I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.
A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.
I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.