Plans to create a new rail centre in Wrexham may be on hold after the Welsh Assembly Government said it could not help fund it.
Plans for a direct link to London Marylebone may be scaled down
The centre, which could create 50 new jobs, may now be moved to Shrewsbury.
The Wrexham, Shropshire and Marylebone Railway Company (WSMR) said it may also have to scale down plans for direct services between Wrexham and London.
An Assembly Government spokesman said the project was ineligible for a grant, but was looking for other ways to help.
The company wants to base its operations centre at Wrexham station, employing 12 drivers, 11 train managers, 20 customer service staff, and cleaning and support workers.
But WSMR director John Nelson said that after six months of talks officials have told the firm the assembly government does not have the powers to provide a £900,000 grant.
The company wanted the money to create extra facilities for accommodating trains overnight at Wrexham.
It is now considering basing its operations at Shrewsbury where there are existing facilities for parking and cleaning trains overnight.
Mr Nelson said: "We're very disappointed. We've put a lot of time and effort in to this.
"We feel we've wasted a lot of valuable time. If they'd told us at the beginning that they couldn't help, we wouldn't have started the process."
He added: "If we were a public railway service, they could help us, but we're a commercial company and it means we now have to review the situation."
The railway company said it was also approaching Wrexham Council for help.
Council leader Aled Roberts said: "If this rail investment is made at Shrewsbury and Wrexham loses out again, the whole issue is a disgrace.
"This is an opportunity for the Welsh assembly to show its commitment to Wrexham."
The WSMR board of directors met in London on Thursday to discuss the possibility of using Shrewsbury as a base.
That could mean Wrexham will not get all of the 10 weekday services the company was planning to run in and out of London's Marylebone station.
Mr Nelson said after Thursday's meeting that no decision had yet been made, and the company was still hopeful a solution might be found after budget discussions at the Assembly.
Mr Nelson said: "Ideally, we'd like to keep the trains overnight at Wrexham so that they can start and finish journeys there, but if we keep them at Shrewsbury it would be much more difficult to run all the services between Wrexham and London."
If the company's proposed timetable is approved by rail authorities, trains could be running by summer 2007.
An assembly government spokesman said it supported the project "in principle" but added it was not eligible for public subsidy.
A statement read: "The proposal to set up an operating base in Wrexham is not eligible for the usual employment grant funding mechanisms because Wrexham falls outside the eligibility boundary for regional selective assistance.
"The minister, however, has asked officials to report on any alternative ways and means of providing the backing necessary to ensure that - if the project goes ahead - the operating base will be located in Wrexham."