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Terminating a major rail franchise will result in the Department for Transport receiving between £330m and £380m less in premium payments, a government watchdog has found.
According to the National Audit Office, terminating the National Express's east coast franchise presented the best means of protecting taxpayers.
The DfT had taken a "tough approach" in refusing National Express's request in February 2009 to negotiate its franchise following financial problems.
The move could have resulted in other franchises seeking similar treatment, and would have amounted to between £200m and £400m.
At the time, five of the other 15 franchises were seen as high risk due to falling passenger revenues.
Now run by the DfT, the report estimated that the department will receive between £330m and £380m less in premium income when it hands the line back to private ownership at the end of 2012.
It had added that this shortfall was "unavoidable following the steep fall in passenger revenues due to the economic downturn during 2008/09 which led to the termination of the contract with National Express".
The report also found that the move helped avoid disruption to passengers.
Head of the National Audit Office, Amyas Morse said: "In terminating the East Coast passenger rail franchise, the DfT acted decisively to protect the public interest and achieved value for money by avoiding the significant risk that other holding companies would seek negotiated exits from their loss-making franchises."
General secretary of the Rail, Maritime and Transport union, Bob Crow said the report had proved that public ownership is able to deliver rail services as a "clear-cut alternative to the chaos and exploitation of the private train operators".
He added: "The fact that it was the public sector that had to pick up the pieces at short notice in order to protect the taxpayer when National Express left the East Coast in the lurch speaks volumes."
A DfT spokesman said: "We welcome this NAO report and will respond to its findings when they are considered at a future hearing of the Public Accounts Committee."
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