Rail probe 'must be independent'

Ms Eagle said it was unacceptable that the investigation be headed by non-executive directors at the Department for Transport and accused ministers of prejudging the outcome.

She wrote to embattled Transport Secretary Patrick McLoughlin (pictured) hitting back at attempts to "scapegoat" officials and blame the previous government for the scandal.

Mr McLoughlin is expected to face MPs when the Commons returns tomorrow to explain his costly and embarrassing U-turn.

And unions claimed that ministers have caved in to the Association of Train Operating Companies and promised Virgin a "pay-as-you-go" contract to keep running the line while the franchise fallout is cleared up.

Rail union RMT said it was examining whether the 18-month extension would be legal under EU procurement law.

General secretary Bob Crow said the laws could be "conveniently ignored when it suits government policy in favour of private greed."

Pointing to the growing public support in favour of public ownership to the "expense, instability and shambles that is rail privatisation" the union said the running of the line should be given over to Directly Operated Railways, the nationalised outfit currently running the East Coast line.

Mr McLoughlin dropped the award for Britain's most lucrative franchise because of "deeply regrettable and completely unacceptable mistakes" made by his department.

Taxpayers will have to cough up £40 million to rerun the process as current franchise-holders Virgin look to keep control of the line.

FirstGroup had won the rights to the route before a legal battle scuppered the plans.

Mr McLoughlin has already announced two investigations and three civil servants have been suspended.

And now the brake has been put on bidding processes for three other rail franchises - Great Western, Essex Thameside and Thameslink.