BBC Transport Correspondent Simon Montague: Clear signs of improving relations between the government and rail companies

Deputy Prime Minister John Prescott outlined the new package after a meeting with rail company chiefs.

Earlier, the same companies were attacked by Transport Minister John Reid, who warned: provide better service or lose your contracts.

Passenger complaints about punctuality, overcrowding and reliability have gone up since privatisation

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Following Thursday's meeting, attended by Railtrack, the Office of Passenger Rail Franchising and representatives of 25 rail companies, Mr Prescott announced 800 new train drivers are to be recruited in the next 12 months.

In addition, 500 new vehicles - made up of about 370 new carriages and around 170 new power units - will be introduced over the next 12 months.

The immediate package will also see train operators and train leasing companies and suppliers setting up taskforces to deliver better rolling stock reliability.

Railtrack and its contractors are also being pressed to improve track maintenance to ensure fewer delays. The train companies and Railtrack will form a "joint hit squad" to identify and tackle the worst 50 bottlenecks on the system.

There will be a national troubleshooter team to tackle problems across the network and a passenger survey to give a clear picture of performance will be introduced

Mr Prescott said the meeting had been constructive and he had made it very clear that the current state of problems on the railways was "just not acceptable".

He said: "Rail passengers have a right to expect a railway which is reliable, safe and fairly priced. I am pleased that the industry has recognised that it needs to live up to its responsibilities."

John Prescott: The meeting was constructive

Mr Prescott said both sides would now reflect on what had been agreed at the meeting before a national railway summit in February 1999 where fundamental changes will be thrashed out.

He went on: "It will be a long haul but today we saw a very positive step towards improving the system."

The firms themselves have insisted they are on track to become the best in Europe.

Before the meeting, Dr Reid said: "Passengers are faced with problems of punctuality, reliability and overall quality.

"They're fed up with the blame culture where Railtrack will blame the companies, the companies will blame each other.

"They don't want a debate about ownership or ideology, they want improvements."

"The franchises are coming up in a number of years and anyone who's not delivering is not going to find themselves at the table when the franchises are handed out," Dr Reid told BBC News.

The new Strategic Rail Authority set up in shadow form for next spring is designed to organise rail services in the medium and long term.

Ivor Warburton of the train operating companies agreed with the minister's criticisms, but pointed out some improvements including lower fares.

Ivor Warburton on Radio 4's Today programme: "We have a problem with performance in some places"

And he insisted most companies were tackling their problems and issues of punctuality and reliability would soon improve.

The pressure group Save Our Railways said Mr Prescott had to give more details of how he planned to sort out the rail network.

"Mr Prescott should reflect the public mood and put the train companies on a final warning," said campaign director Jonathan Bray.

"The era of profiteering, confusion and poor service must be brought to an end, a new era where quality counts must begin."

Mr Prescott issued the invitation to rail chiefs after defending the transport measures contained in the Queen's speech which left out his white paper.