The Department for Transport is expected on Monday to award the company a new deal to operate the line between London and Scotland for another two years. The contract will take the form of a “direct award”, when the incumbent is handed a short-term deal without other train operators being able to bid.

The announcement could prove awkward for Chris Grayling, the transport secretary, who has been criticised for his handling of Virgin’s east coast franchise. It is being scrapped in 2020, three years early, after the company overestimated passenger numbers and suffered a revenue shortfall. It is feared that the franchise could collapse even sooner, forcing the government to rewrite the contract or even renationalise the line.

The confirmation of the west coast deal could be seen as a “reward for failure” by critics of Britain’s privatised railway. The west coast is the country’s most profitable rail line, making £51 million for Virgin — a joint venture between Sir Richard Branson’s Virgin Group and Stagecoach — in 2016-17.

It will also fuel concerns over the franchising system, which has suffered a shortage of bidders in recent years. A third of rail franchises are let on a direct award basis. However, the DfT is preparing to mount a staunch defence of the deal, insisting that it merely represents confirmation of a contract announced more than a year ago, before the east coast fiasco.

Sources said that the west coast was well run, with the franchise delivering more than £200 million a year in premium payments to the government, reversing a previous position when it made a £75 million net loss.

It was also claimed that comparisons with the east coast were unfair. The east coast is 90 per cent run by Stagecoach. However, the west is 51 per cent owned by Sir Richard’s company, with Stagecoach holding a 49 per cent stake.

Stephen Joseph, executive director of the Campaign for Better Transport, said: “There is a need for a fundamental review of franchising. We can’t keep the railway running on direct awards. We need long-term thinking.”

The existing west coast franchise had been due to end in April. The government announced more than a year ago that a direct award would be made, allowing Virgin to run the line up to April next year. At that point, a new franchise was expected to be created — “the west coast partnership” — to run both west coast trains and HS2 services when the high-speed line is built in 2026.

However, it is believed that Virgin will now continue to run the line for a further year — up to April 2020 — delaying the start of the long-term west coast partnership by 12 months.

The direct award is expected to require Virgin to improve its passenger satisfaction ratings, extend free wifi in carriages, introduce passenger compensation for trains that are at least 15 minutes late and accommodate work needed to prepare for HS2.