Tory ministers are accused of a "reward for failure" after handing chaos-hit firm Avanti a six-month lifeline to improve the West Coast main line.
A “short-term extension” to Avanti West Coast's contract will let it run trains until 1 April 2023 after ministers blasted its “unacceptable” service.
The government will then look at whether the firm deserves a full-blown new contract, based on performance.
But Shadow Transport Secretary Louise Haigh said: "This is a reward for abject failure, and a slap in the face for passengers.
"This failing operator has caused travel misery, and the Government's answer is to hand over millions more in taxpayers' cash and consign passengers to another six months of chaos.
"If the government had any interest in doing their job, they would strip this failing operator of the contract.”
It came hours before thousands of rail staff, including on Avanti, walk out in a fresh strike on Saturday.
TSSA union General Secretary Manuel Cortes blasted: “Avanti have failed yet are rewarded for that failure.
“Our members in Avanti have been put under unacceptable stress levels through the incompetence and failure of Avanti’s operations.
"This contract extension will be demoralising - they deserve better and the government must act.”
Avanti has been running as little as one train an hour from London Euston to Liverpool, Manchester, Birmingham and Glasgow due to a shortage of drivers.
Timetables have often only been confirmed days in advance, pitting passengers into a last-minute scramble for cheaper tickets.
The government blamed “old working practices” where drivers volunteer to work weekends.
But critics say the crisis exposed that Avanti should have hired more drivers.
The government said Avanti must recover timetables from about 180 to 264 trains per day on weekdays. The firm will also have to extend booking options for passengers, recruit more train crew, and reduce its reliance on drivers volunteering on rest days.
Transport Secretary Anne-Marie Trevelyan said: “Services on Avanti have been unacceptable and while the company has taken positive steps to get more trains moving, it must do more to deliver certainty of service to its passengers.
“We have agreed a six-month extension to Avanti to assess whether it is capable of running this crucial route to a standard passengers deserve and expect.”
Greater Manchester mayor Andy Burnham welcomed the government for "putting Avanti West Coast on notice", adding: "At last, there is a clear recognition of the crisis engulfing the country’s most important railway line and the management failure that has led to that."
But he warned "very few people" in the city will back the extension and called for a review date in mid-December.
Graham Sutherland, chief executive of FirstGroup which owns Avanti, said: “We are committed to working closely with government and our partners across the industry to deliver a successful railway that serves the needs of our customers and communities.
“Today’s agreement allows our team at Avanti West Coast to sustain their focus on delivering their robust plan to restore services to the levels that passengers rightly expect."
