The Liverpool to London route is among several franchises described as "facing financial distress", in a highly-critical report by the Commons transport select committee.

The report high lighted how Virgin West Coast's revenue growth over the 11 months to March this year was a puny 0.5%, as the economic crash took its toll on ticket sales.

And it warned of the dire consequences for the public purse if Richard Branson's company went the way of East Coast operator National Express – which handed back the keys earlier this month.

The committee, chaired by Liverpool MP Louise Ellman, also launched a fierce attack on ministers for ignoring its warnings of three years ago that the franchise system was broken.

And it turned its fire on attempts to create a fairer fares system, warning that passengers must still go to "extraordinary lengths" to obtain affordable tickets.

On July 1, Transport Secretary Lord Adonis revealed that a publicly-owned company would be set up to run trains on the East Coast line at the end of the year.

The move followed the refusal by crisis-hit National Express to put in any further funding – and the government's refusal to renegotiate the contract.

Today's report, entitled Rail Franchising Off The Rails, suggests other train operators may follow suit, raising fears about no fewer than four franchises, including Virgin West Coast.

And it concludes: "If more franchises were to default, the financial implications could be very serious indeed, perhaps jeopardising funding for other transport projects.

"We are concerned that there is a lack of information available to us regarding the financial stability of franchise operators. Many more franchises may be struggling to meet their required financial agreements, without our knowledge."

Mrs Ellman said her committee's 2006 warning – made just weeks before GNER defaulted on its £1.3bn East Coast contract – had been "vindicated".

And she said: "The failure of two major contracts in three years is evidence of serious underlying problems with the current franchising model.

"There is no point involving the private sector if companies can cream off the profits in good times, but leave passengers and taxpayers to pick up the bill when hard times hit."

The report's conclusion was that franchises should be longer, to encourage greater investment and discourage 'back door fare rises', such as charges for seat reservations.

On fares, the MPs condemned the huge hikes last January – of 6% on regulated fares and 7% on unregulated – and attacked their still-complex structure.

The report said: "Even passengers who understand the system often have to spend considerable amounts of time finding the best deals, often only available on the internet."