The government has plans for 1,300 new train carriages
Rail passengers in England and Wales face more overcrowding and higher fares until the network is expanded, a spending watchdog has warned.
The National Audit Office (NAO) said direct government control of the railways, begun in 2005, had delivered better value for taxpayers.
But future pressure on capacity could reverse any benefits, it warned.
The NAO said 1,300 new train carriages had been ordered, and ministers say they are tackling passenger growth.
The NAO report examined the deals the government has done with private train companies since it took control of the railways three years ago.
It has so far handed out eight contracts for running services in England and Wales, including the franchise now held by First Great Western.
The rail franchises in Northern Ireland and Scotland were not examined in the report.
The NAO said the change had delivered better value for money, with subsidies expected to fall.
But, it concluded, the problem now was overcrowding and rising fares.
Many passengers, particularly on routes to and from London would face increased crowding at peak periods until capacity increased, the NAO said.
The news that fares are likely to rise above inflation in these difficult times will infuriate many passengers who have no alternative
Public Accounts Committee
The government has plans for 1,300 new train carriages, but they will not all be on the tracks until 2014.
The report also noted the most regulated fares - such as saver and season tickets - had risen by 1% above retail price index inflation.
Non-regulated fares had increased by 6-7%, with some by as much as 20% in 2007, it said.
Tim Burr, head of the NAO, said: "The Department for Transport has contracted to save the taxpayer money while improving service quality, but it will need to see that capacity increases are well-managed and timely if passengers are to expect less crowded and more reliable journeys."
Edward Leigh, chairman of the Commons Public Accounts Committee, welcomed news the new franchising system was providing taxpayers with better value for money.
But, he added, travelling by rail was "still too often an unpleasant experience".
"The news that fares are likely to rise above inflation in these difficult times will infuriate many passengers who have no alternative but to travel day after day on packed trains," he said.
"Indeed, rush-hour crowding is expected to increase for many, especially on lines into London, until 1,300 new carriages come on stream. For passengers, this increased capacity cannot come too soon."
A spokesman for the Department for Transport said ministers would be studying the NAO's findings "in detail".
He said rail travel had seen "record levels of growth in the last decade" and the government's priority was "to address both current and future passenger growth".
He added: "That is why over £10bn is being invested to tackle the crowding problems currently experienced by passengers.
"Our plans will ensure that the rail network can cope with more than 20% growth by 2014, on a network which will be even safer and more reliable."
But Tony Miles, from Modern Railways magazine, said the figure of 1,300 new train carriages was misleading.
"The 1,300 aren't all new, it is new and additional, which involves the government counting some trains transferring from one company to another.
"The real figure is likely to be nearer 800 completely new carriages and half of these are still to be ordered," he said.
A survey published in July suggested only four out of 10 rail passengers felt they got value for money.
The poll by rail watchdog Passenger Focus also showed satisfaction ratings fell for 13 train companies since spring 2007, rose for seven and stayed the same for one.
However, 80% of the 25,000 people surveyed were satisfied with journey quality, 2% up on 2007's figures.