Network Rail has been given a one-week deadline to improve a pay and conditions offer to 7,000 signalling and other workers or face the threat of strikes.
The move followed rejection of a two-year pay offer worth 4.8 per cent this year and the rate of inflation plus 0.5 per cent in 2009 by members of the Rail Maritime and Transport Union and the Transport Salaried Staffs Association.
Members of the two unions heavily rejected the proposed deal in a consultative ballot and could now move to a vote on whether to take industrial action.
The unions have said the pay offer for this year is acceptable but they are not happy with the amount of money being proposed in year two.
The unions argued that the second stage of the proposed deal would not protect workers against the rising cost of living, such as higher fuel bills and pension contributions.
Bob Crow, general secretary of the RMT, said his members rejected the offer by a margin of two to one, adding: "Their verdict is quite clear and we have today told Network Rail that unless there is an acceptable offer on the table within seven days, we will put in place arrangements for a ballot for strike action."
Manuel Cortes, assistant general secretary of the TSSA, added: "They have demonstrated by this vote that they will not accept that situation and are now ready to vote on industrial action unless Network Rail comes back to the table with a sensible offer."
A spokesman for Network Rail said: "We feel this is a good deal for our people. However, we will continue discussions with the unions to resolve the issue."