The West Coast Main Line may not be able to sustain passenger growth within 10 years despite massive investment, a government watchdog has warned.
The NAO says industry consensus predicts the line filling up
The rail line between Glasgow and London is undergoing an £8.6bn upgrade.
The National Audit Office said it might not be able to cope with current levels of growth beyond 2015.
It said the line - the busiest in Britain - had been a victim of its own success and more work may be needed due to rapidly rising passenger numbers.
Network Rail said the increase in passenger numbers was a sign of success and voiced confidence that the numbers could be accommodated.
Deputy chief executive Iain Coucher told BBC Radio 4's Today programme: "We've got a programme of work still being undertaken now and more trains will be coming on over the next couple of years.
We are looking at capacity issues, but the only way we can actually tackle this problem is to take forward the work that we have already started
"And going forward, there's a whole range of things we can do: longer trains, more trains per hour through the key bottlenecks and then eventually closer together through new signalling systems."
Transport Secretary Douglas Alexander told BBC Radio Scotland "capacity issues" were being looked at.
"We have seen passenger numbers rising - indeed we have a one billion passenger railway, the fastest-growing passenger railway anywhere in Europe," he said.
Numbers of carriages had already been increased from eight to nine, said Mr Alexander, and there were plans to increase the number of trains from nine to 12 by 2008.
The line runs between Glasgow and London
The results of an independent review, which is examining the issue of capacity and the case for a new high-speed rail line, are due to be published within weeks.
Mr Alexander said he would unveil plans for the future of the railways next summer.
The auditors' report on the west coast line warned that electronic signalling equipment might become obsolete significantly earlier than expected.
To sustain train operations, the line's operator, Virgin Trains, was paid £590m more in subsidy in the period 2002-06 than envisaged in its franchise agreement, their report said.
National Audit Office (NAO) head Sir John Bourn said: "The weaknesses in the management of the project before 2002 should provide ample warning of the dangers of entering into a scheme on this scale without clear leadership, plans and project management expertise."
Following the warnings, shadow transport secretary Chris Grayling said he was "more and more concerned by the government's apparent inactivity over the mounting capacity crisis on our railways".
He said: "Over the next seven to 10 years we will see a third more passengers, but no more capacity for them to travel.
"We're going to need pretty urgent action, but the government has yet to come up with anything."
Meanwhile, Liberal Democrat transport spokesman Alistair Carmichael said the upgrade was "only a short-term solution to the capacity problems that will arise in the next decade".
"If we are to offer a viable alternative to flights within the UK we are going to have to start planning to meet extra demand by putting forward proposals for new high speed lines," he said.
The Scottish National Party said the Labour and Liberal Democrat coalition had failed to deliver a high speed rail link after seven years of power in Scotland and provide a link to the Eurostar system.
The report said the upgrade's remaining key projects would increase capacity for passengers and freight, but the industry consensus was that the line would not be able to sustain current growth levels beyond 2015-2020.
The west coast line now has high-speed tilting Pendolino trains, which have significantly cut journey times between Scotland, the north of England and London.
The NAO said punctuality and passenger satisfaction were much improved and the number of passenger journeys on Virgin West Coast increased by 20% in 2005-06, which was 4% more than expected.