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The Office of Rail Regulation said, despite warnings earlier this year, the infrastructure company had continued to deteriorate.

Now the regulator is considering whether Network Rail is in breach of its licence conditions, which would trigger a fine.

In February 2008 the regulator imposed a ^14 million penalty on Network Rail after it failed to complete engineering work on time at the start of the year, wrecking the return to work of more than 250,000 commuters.

Now it has been told it needs a ^step change in performance^ in a withering letter by Richard Price the ORR^S chief executive.

"We appreciate that there has been a significant increase in the delay and disruption caused by cable thefts and other external factors, but these alone do not explain the extent of the underperformance,^ he told Sir David Higgins, Network Rail^s chief executive.

He singled out the poor performance on the country^s three major strategic routes: the east and west coast main lines from London to Scotland and the Great Western track to Wales and south west England.

Long distance trains are classed as running late if they arrive 10 minutes behind schedule, commuter services are given five minutes leeway.

Poor punctuality is not the only cause for disquiet about Network Rail^s performance. The company has also been criticised for failing to keep passengers properly informed of disruption when services were thrown into disarray by bad weather last winter.

It has also been accused of being inefficient by Sir Roy McNulty, who told ministers that its running costs were at least 40 per cent higher than its continental counterparts.

Robin Gisby, Network Rail^s network operations director, defended its performance.

^Over the last few years the industry has driven up performance levels to amongst the best in Europe with over 90% of trains arriving on time.^