Half the company's drivers had not been trained to use it and of the 50 based at Paddington station only 15 had taken the relevant course.
At the hearing in London, Richard George, the former managing director of Great Western, also conceded that no attempt was made to match ATP- trained drivers with rolling stock equipped with the system.
Mr George was on the Swansea to Paddington service that collided with a freight train in Southall, west London, in September 1997, killing seven people and injuring 150. He broke down in tears at the inquiry in September.
Yesterday he admitted the company should have shown greater commitment to the ATP trial. Only 13 per cent of trains had been running with it. He denied suggestions by John Hendy QC, counsel for the injured and bereaved, that under his leadership the firm was trying to "sabotage" the ATP trial. Mr Hendy argued the safety system was interfering with train performance and therefore incurring the firm financial penalties.
Mr George said he had "serious misgivings" about ATP, which had been highly unreliable. In meetings with colleagues he had been anxious that maintenance costs did not constitute a "bottomless pit".
He said he could not explain why internal documents dating from before the Southall accident suggested that all drivers were familiar with ATP, but he had accepted them as factual.
Mr Hendy said that while the company invariably explained the absence of ATP on services as due to technical faults, in most cases it was because a trained driver had not been assigned.
Great Western was also involved in last month's Paddington crash. The industry has accepted the Paddington accident could have been avoided if the Thames Trains service that headed out of London into the path of the Great Western train had been fitted with ATP.
Mr George accepted that Great Western was at fault atSouthall because its train should have been turned around at Swansea so that a cab with operational ATP was facing the front. The firm was fined pounds 1.5m in the summer after admitting Health and Safety offences, but escaped criminal prosecution for corporate manslaughter.
Mr George said he had not wanted to "dump" the system but it had been a burden on the company because it was so unreliable. He conceded the firm had an obligation to ensure the system was operational and all drivers were familiar with it.
Since the Paddington crash, the industry has agreed to accelerate the introduction of the train protection warning system, "a halfway house" technology that would have prevented last month's disaster, but not the Southall crash. The industry is also committed longer term to introducing ATP.
t More than two rail signals a day continued to be passed at danger after the Paddington crash, figures showed yesterday. There were 73 instances in October, the Health and Safety Executive said, compared with 80 in October 1998.