Labour has attacked the Coalition's handling of the West Coast Main Line franchise bid, branding it "yet another staggering example of the monumental incompetence of the shambles of the Government".

Shadow transport secretary Maria Eagle argued it was ministers who were responsible and who re-designed franchising policy to make it "much more difficult to calculate which bidder should win".

She told MPs: "It's a failure of policy, a failure of process, a failure of ministerial oversight and a failure of ministerial leadership."

Her comments came as the Government decided Sir Richard Branson's train company should carry on running the Glasgow-to-London line for now, as reported in later editions of last night's Evening Times.

Virgin Trains had lost out to rival transport company FirstGroup in the battle to operate a new 13-year West Coast franchise.

But with Sir Richard mounting a legal challenge to the Department for Transport (DfT) decision, the Government scrapped the franchise competition earlier this month after "significant technical flaws" were found in the franchise process. FirstGroup had been due to take over the line from December 9.

Yesterday, Transport Secretary Patrick McLoughlin said the DfT would negotiate with Virgin for the firm to continue running West Coast Main Line for a short period – expected to be between nine and 13 months – while a competition was run for an interim franchise agreement.

Mr McLoughlin said: "This is a regrettable outcome caused by unacceptable mistakes made in my department."

He added: "There is no suggestion that FirstGroup or any of the other bidders including Virgin Trains acted in anything other than good faith."