The railways may need an injection of government money if they are to be properly modernised, a passenger watchdog body has warned.

The Central Rail Users' Consultative Committee (CRUCC) said private sector cash alone may not be enough to fund the transformation of the rail system.

The government had to be ready to chip in to ensure the public received good train services, the committee said.

It added that passengers could also benefit from a possible reduction in the number of train companies.

"The government must be prepared to pick up the tab if there is a gap between what passengers and the country as a whole want from train services and what the private sector can afford to supply," said Wendy Toms, chairman of the committee's rail franchising task force.

"Above all, continued subsidy from the taxpayer will be vital to maintain fares regulation and to ensure that socially necessary but unprofitable services are protected."

Mediocre service

The 25 train operating rail companies have franchises ranging from seven to 15 years, and the question of renewal of these franchises is currently under discussion.

The CRUCC said giving companies 20-year franchises would give them a real incentive to invest heavily in the railways.

Ms Toms said travellers would not accept bad services in the future.

"Rail passengers won't forgive either the rail authority or the government if they find themselves stuck with a mediocre or poor train company for years on end." she said.

Under current plans, rail subsidies from the government are set to fall to £700m by 2004, leaving the train operating companies and Railtrack to fund any improvements.

Rail standards and safety have been in the spotlight since the Paddington rail crash, which killed 31 people in October last year.

On Thursday the Health and Safety Executive said the number of rail signals passed at danger, a feature of the Paddington crash, had fallen significantly.