Virgin Trains is locked in a bitter row with Transport Secretary Ruth Kelly after rejecting plans for 106 new carriages on the West Coast Main Line.
Ms Kelly yesterday told the Commons the Government was pressing ahead with plans to ease overcrowding on Virgin's Pendolino trains but the rail operator immediately turned it down.
It is refusing to add the extra carriages unless ministers agree to extend its franchise to run West Coast Main Line services. But the Government has rejected Virgin's demands.
The WCML runs from London through Birmingham's New Street station into the North-west and Scotland.
The Department for Transport published draft proposals to add extra carriages to the WCML last year, and Ms Kelly announced the final decision.
The nine-coach Pendolinos running between London, Birmingham and Manchester will be extended to 11 coaches, she said.
This would increase space on the trains, which tilt when turning corners at high speeds, by about 100 seats per vehicle. But a spokesman for Virgin revealed the proposed upgrade will not happen.
He said: "The new carriages would be fitted in 2010-2011, and our franchise is due to expire in 2012.
"This is a huge task on a modern train. A Pendolino has 240 different computers.
"It would mean taking trains out of service while the carriages are fitted. We want to do it, but it wouldn't make sense to do this just before the franchise runs out.
"We have asked for a two-year extension up to 2014, so we get a couple of years out of the extended trains.
"However, this request has been refused by the Department for Transport."
A Department for Transport spokesman said: "We have rejected Virgin's proposal for an extended franchise.
"We will continue to look for ways to increase the number of coaches on the West Coast Main Line."
Passenger Focus, the body which represents passengers, urged ministers to consider compromising with Virgin.
Paul Fullwood, the West Midlands chairman, said: "What we want to see is the introduction of these carriages as soon as possible." Virgin still plans to increase services on the West Coast Main line with a new timetable in December, which will mean trains between Birmingham and London run three times an hour.
But even with these additional services, the operator says services will be seriously over-crowded by 2012.
It has forecast that 15 per cent of trains will be full, meaning every seat is taken and passengers are forced to stand, unless the extra coaches are added.
Ministers yesterday announced plans for a total of 1,300 carriages to be introduced on the UK's rail network.
The extra carriages would increase the amount of rolling stock by ten per cent, the Department for Transport said.
The coaches will be leased by rail operators, but paid for largely by subsidies from the Department for Transport.
They will include 92 new coaches for the London Midland service, which also runs services between Birmingham and London as well as trains from Birmingham to Liverpool and Northampton.
Chiltern Railways, which operates a range of local services in the West Midlands, will receive 12 extra coaches.
Ms Kelly said: "Passenger numbers have grown by an unprecedented 40 per cent over the last decade, so that more people than ever before are travelling by train.
"The Government is investing £10 billion to increase capacity on the railways benefiting those travelling on the busiest routes in cities like Birmingham, Leeds, Newcastle, Manchester and London.
"Following today's publication of the rolling stock plan, Network Rail can now begin their preparations for extending platforms, depots and sidings to accommodate longer trains.
"This is a major step forward towards fulfilling our commitment to tackle overcrowding on the busiest routes and, deliver real improvements for rail passengers." n What's your experience of train travel?