The Transport Department was "irresponsible" over its role in the collapse of the £5bn West Coast Mainline rail contract, a group of MPs has said.
Members of the Transport Committee said the Government department had embarked on an "ambitious, perhaps unachievable" reform in haste, and claimed that ministers and senior officials were lied to.
FirstGroup was told it had won its bid to take over the franchise from Virgin Trains, but the decision was scrapped after the discovery of "significant technical flaws" in the way the procurement was conducted.
Virgin has now been told it can run the service until November 2014, with the fiasco costing taxpayers over £40m.
The mistakes came to light after bidder Virgin Trains, which had run the West Coast Mainline since 1997, launched a legal challenge against the decision.
A Government-commissioned report led by businessman Sam Laidlaw last month gave a damning indictment of how the competition was handled.
Three members of staff at the DfT were suspended over the episode.
The Transport Committee said in its report today: "A more direct description of what happened is that ministers and senior officials were lied to about how the outcome of the franchise competition had been reached.
"We cannot categorically rule out the possibility that officials manipulated the outcome of the competition not only to keep First Group in the running for as long as possible, as Mr Laidlaw suggested, but to ensure that First got the contract.
"We recommend that the DfT find a way of undertaking a full email capture, reporting to someone suitably independent, to help get to the bottom of why DfT staff discriminated against Virgin and in favour of First Group during the franchise competition."
Louise Ellman, chair of the committee, added: "We also want to hear from the Secretary of State what lessons he thinks current and future ministers must learn from this episode where policy ambition exceeded his department's capability and resources."
A DfT spokesman said: "We are putting in place measures that will prevent this embarrassing episode from happening again and the Secretary of State has given an undertaking to keep Parliament updated on costs.
"While we are currently working to minimise the impact on the taxpayer, we estimate the failure of the competition and subsequent independent inquiries is around £48m."