Britain's worst train operator has been forced into a £29 million package of improvements after the Government accused it of breaking its franchise agreement.
First Great Western was condemned by Transport Secretary Ruth Kelly for cancelling too many trains. But the firm, which runs services linking London with Oxford, Worcester and Hereford, will keep its franchise.
An MP last night insisted that the company should lose its franchise entirely unless it improves its performance quickly.
Peter Luff (Con Mid Worcestershire) refuses to take the train between his constituency and London when he attends the House of Commons, because services are so often delayed or cancelled - or fail to reach their destination.
He said: "I welcome Ruth Kelly's announcement, even though if it was up to me they would simply lose the franchise, as I have said in the past.
"I hope services now improve. But this really must be the last chance saloon, and if nothing changes then the Government must not hesitate to sack them."
The Office of Rail Regulation, the official watchdog, gave First Great Western the lowest rating of all the rail franchises in its latest report.
Ms Kelly yesterday told the House of Commons the firm had exceeding the number of trains it was allowed to cancel, in the second half of last year.
It had also given the Department for Transport incorrect figures about the number of cancellations, she said. She told MPs: "The performance of First Great Western has persistently fallen short of its customers' expectations and has been unacceptable to both passengers and Government.
"The measures I have announced today will lead to a reduction in train cancellations and also provide a substantial package of benefits to customers."
The company is to cut ticket prices for more than 500,000 cheaper tickets to popular destinations, and double its compensation rates to passengers this year.
It will also recruit extra drivers, guards and technicians to boost reliability as well as improving its depot and fleet.
But Ms Kelly said she had decided against fining the train operator, on the grounds that this would not help passengers.
Moir Lockhead, First Great Western's chief executive, said: "This additional investment will directly benefit passengers and underpins our plans to improve the quality and reliability of services we provide."
Conservatives claimed the Government should never have allowed services to become so bad in the first place.
Theresa Villiers, the shadow home secretary, said: "While a remedial plan is welcome, the Government must accept that the franchise they imposed on First Great Western was ill-thought-through and ill-advised, and they must take a large share of the blame."
Anthony Smith, chief executive of rail customer watchdog body Passenger Focus, said: "Clearly if First Great Western cannot get this right then they should not continue with the franchise."