Three Department for Transport officials involved in the now-scrapped West Coast rail franchise competition have been suspended, the department said today.
The competition to run trains on the West Coast Main Line was cancelled following the discovery of "significant technical flaws" in the way the franchise process was conducted, at a cost of £40m.
In the early hours of Wednesday morning it was revealed that the DfT will no longer be awarding a franchise contract to run the West Coast service to FirstGroup when the current franchise expires in December.
A DfT spokesman said: "Three officials involved in the West Coast franchise competition were today suspended by the Permanent Secretary while the full facts are established. No further details will be issued at this time about the suspensions."
Speaking on Wednesday morning Patrick McLoughlin, the transport secretary, refused to say sorry for the debacle, pinning blame of Department for Transport officials.
"I'm not going to apologise for the terrible mistake that has been made by the Department," he said.
"I want to make sure what lessons need to be learnt from what went wrong with this have not been repeated in those particular franchises.
"I want to make it absolutely clear that neither FirstGroup nor Virgin did anything wrong. The fault of this lies wholly and squarely with the Department for Transport.
McLoughlin was not transport secretary at the time the initial decision was taken, but was moved to the job in the recent cabinet reshuffle.
In his cabinet shake-up David Cameron moved Justine Greening from the DfT to the international development department. All the other Tory ministers in the DfT were also moved out of the department at the same time. Lib Dem Norman Baker remained.
The now scrapped deal would have seen Sir Richard Branson's train company lose its West Coast franchise.
Sir Richard had mounted a legal challenge to the decision by the Department for Transport (DfT) to award a new 13-year franchise for the West Coast not to Virgin Rail but to rival transport company FirstGroup.
The mistake is a huge embarrassment for the government, coming the day after Ed MIliband sharply criticised it for performing multiple U-Turns and for being "incompetent".
Speaking this morning the Labour leader described the West Coast Main Line decision as a "fiasco".
Miliband told BBC Radio 5 Live: "When you look at the latest fiasco with the West Coast Main Line - another Government screw-up, another Government mistake, another case of them blaming someone else, apparently they are saying it is the fault of their civil servants - I think competence is an issue."