A deal to run rail services to and from Exeter has been delayed for more than three years in the wake of the West coast mainline fiasco.
The Government has been accused of incompetence as it was announced that a new contract to run trains on the Great Western route would not now start until July 2016.
Under the original franchise timetable an operator had been due to be announced this month.
The bidding contest, which was at an advanced stage, was put on hold last year after the Government was forced to pull the plug on the controversial West Coast deal, following the discovery of "significant technical flaws" in the way the franchise process had been conducted.
The subsequent cancellation of the Great Western competition and lengthy delay before the franchise is awarded will raise concerns that service improvements promised by the long franchise, such as tackling overcrowding and reliability, will not now be realised.
The Department for Transport is also facing legal action from train firms that tendered for the new franchise after it cancelled the bidding process and then refused to pay compensation.
In the meantime, the current operator First Great Western has had its contract extended until October, and negotiations are under way for the firm to continue to run services for a further 33 months until the summer of 2016.
In a ministerial statement on long-term plans for rail franchising, Transport Secretary Patrick McLoughlin said: "In order to roll out the programme and stagger future competitions, it will be necessary to exercise a number of contractual extensions with current operators and to negotiate a series of direct awards with current operators.
"During these discussions the department will look to negotiate further passenger benefits, which will ensure the best deal for tax payers."
In publishing the delayed timetable, Mr McLoughlin also announced he was opening the bidding to private companies for a new franchise for the East Coast main line, which has been run under the control of the DfT since November 2009 after transport company National Express pulled out.
Despite the lengthy delay to the Great Western franchise, a Department for Transport spokesman insisted it would still see improvements.
He said: "The Great Western route is due to benefit from a massive investment programme between now and 2020. This will include electrification, line upgrades, station upgrades, new rolling stock and also the introduction of the Crossrail services."
But Labour MP for Exeter Ben Bradshaw said: "Taxpayers and Westcountry rail users are now having to pay an even higher price for this Government's incompetence over the West Coast franchise in higher compensation to the rail operators, delayed improvements and higher fares.
"We are desperate for the long promised improvements to our antiquated rolling stock and services to cope with record passenger numbers but now face having to wait several more years. It's shocking that the Ministers responsible for this shambles are still in their jobs."
A spokesman for First Great Western confirmed the company has yet to agree with the Government to continue running services after October.
He said: "The deal is still to be hammered out. We are talking to the DfT about what that agreement might practically look like."
