Conservatives admitted they got rail privatisation wrong last night.
In another major split from the party's past, shadow Transport Secretary Chris Grayling admitted the breakup of the railways by the last Tory government had pushed up running costs and hindered expansion.
He called for the reintegration of track and train, so that local train operators would also have some control over rail infrastructure.
But Labour said this would mean breaking up Network Rail into and fragmenting the rail network.
Steve McCabe (Lab Hall Green) said: "To talk about reintegrating the railways and breaking up them up at the same time is madness."
Mr Grayling told a meeting of rail industry figures in London that the structure of the system was the source of much of their problems.
"We think, with hindsight, that the complete separation of track and train into separate businesses at the time of privatisation was not right for our railways," he said.
"We think that the separation has helped push up the cost of running the railways, and hence fares, and is now slowing decisions about capacity improvements.
"Too many people and organisations are now involved in getting things done - so nothing happens.
"As a result, the industry lacks clarity about who is in charge and accountable for decisions."
Mr Grayling said over-crowding on the railways would reach a crunch point in the next few years despite record fare levels.
A review, leading to a strategy paper next year, will be carried out "with a view to securing a much greater degree of integration between track and train".
Mr Grayling added: "We are not expecting to recreate British Rail, but we do want to work with the industry to identify a better structure to ensure it can meet the challenges of the next decade."
The rail network itself would remain in public ownership, but new integrated organisations would manage the track in their franchise area.
The aim would be to ensure there is greater scope for more long-term investment decisions, he said.
The length a franchise lasts could also be increased, up to around 20 years, he said.
"Of paramount importance in the work we do will be ensuring that any new structure must protect the interests of freight users and encourage future growth in rail freight."
Conservatives also wanted to give rail workers a share in the financial success of the railways to discourage strike action, he said.
West Midland MEP Mike Nattrass said the Conservative policy would be impossible to implement because of EU rules.
"Ever since 1991 Brussels has made it clear that the two aspects of rail transport, tracks and trains should be operated by different organizations".