A committee of four MPs, two Labour and two Tory, which had considered the Bill for 32 days, decided by a majority of three to one that the case for construction as set out by British Rail and London Transport had not been 'proved'.
The line, from Reading to Shenfield, is planned to run in an east- west tunnel under the centre of London between Paddington and Liverpool Street, linking commuter lines into the two stations.
Ministers were adamant, however, that the scheme would still go ahead. Steven Norris, Minister for Transport in London, said: 'Crossrail is not dead. This will delay it but we are still committed to it. It is an excellent scheme.'
Tony Marlow, the Tory chairman of the committee, declined to give reasons for the decision and said it was open to the Government to introduce a hybrid - joint private and public - Bill.
Mr Marlow and the Labour MPs John Marek and Ken Purchase opposed the project, with only Matthew Banks, Tory MP for Southport, in favour. However, while the MPs appeared to have differed on their reasons for rejecting the Bill, they all questioned the failure of the promoters to include a junction with the Channel tunnel rail link from St Pancras to Folkestone which is due to be built by 2002. Mr Purchase said: 'The junction with the Channel tunnel rail link is very important, as is the connection with the Heathrow Express. Under this Bill, it would not have been possible to add in a link later because of engineering difficulties.'
The committee was also influenced by evidence which suggested that the scheme was not needed because of a tail-off in employment in the City since the late 1980s.
The Government's own half- hearted approach to new rail projects was also a contributory factor. The scheme was originally to be funded entirely by the taxpayer but in late 1992, Norman Lamont, the then Chancellor, announced it would have to be a joint public-private scheme. The Labour members of the committee are thought to have been concerned about the terms that would have been needed to attract a private investor.
The decision to reject the Bill disappointed the City, where business leaders have expressed strong support. Denis Tunnicliffe, managing director of London Underground, said London needed 'a 21st century railway'. Jimmy Knapp, leader of the RMT railworkers' union, accused the Government of 'bungling yet another improvement to transport infrastructure'.