The rail regulators will be ordered to intervene more speedily when trains are repeatedly cancelled or late and the rail companies may face instant fines of at least pounds 1m. At present, they are served notice that they will be penalised if they do not meet their licence conditions over the following four weeks.
As a last resort, operators who persistently let down their passengers will lose their franchises before they come up for renewal.
Mr Prescott has ordered his officials to find ways of beefing up the existing regulatory regime that would not require legislation, after failing to win a promise from Tony Blair that his plans to set up a powerful strategic rail authority would be included in the Queen's Speech in November. The Government's programme will be discussed tomorrow at Chequers, to which Mr Blair has summoned the Cabinet for a one-day strategy session.
Yesterday, Mr Prescott said there were "quite a lot of things" he could do without legislation.
"There are measures I can adopt with regard to the railways which are now under full consideration," he said.
Ministers said Mr Prescott was drawing up a new package of measures to safeguard passengers, which he may unveil at the Labour Party conference at the end of this month.
He is alarmed by persistent evidence that the rail operators are letting down their customers.
Last month, the official passenger watchdog attacked the "truly dreadful performance" by some companies in the first full year since privatisation, and the regulatory body revealed that punctuality had declined on 48 routes and improved on only 16.
Yesterday, the French-owned Connex company, which operates the South Eastern and South Central commuter routes in and around London, came under fire from MPs and passenger watchdogs for failing to disclose bonuses of between pounds 20,000 and pounds 30,000 for its directors.
On his return from holiday, Mr Prescott moved to reassure Labour MPs and pressure groups worried that the White Paper on transport he unveiled in July had effectively been shelved by Mr Blair's refusal to provide legislative time. "I understand their concerns but they are not warranted," he said, insisting that his proposals were "right on the front burner".
Mr Prescott insisted that the Government would press ahead with the plan for setting up the rail authority and letting local authorities charge motorists for driving into cities and levy a charge on workplace parking places. "I am more than satisfied that we are on our way to achieving it and working with a Prime Minister who fully believes in it," he said.
Government sources suggested that Mr Blair was happy to see the crackdown on the rail companies go ahead but admitted that he was cautious about the introduction of measures to penalise motorists in the run-up to the next general election.Reuse content