The franchise, which covers services on the Brighton main line, runs from September 20, 2009 to July 25, 2015.

The name 'Southern' will be retained under parent company Govia.

The final year of the franchise is subject to performance and there is a two year extension available at the discretion of The Department for Transport.

Southern has been criticised in recent months for its timetable changes introduced in December to try to relieve congestion on the Brighton main line, one of the busiest routes up to London.

Teething problems led to a series of delays and cancellations, with commuters airing their frustration through a petition and the local press over changes to rush-hour services to East Croydon and London Bridge.

Chris Burchell, who found himself in the eye of the storm, will continue as Managing Director of Southern, and will lead the team during the new franchise.

Southern has pledged to create an additional 10 per cent carrying capacity across the network by December 2013; a £76m investment programme including £23m of interior improvements to trains, and £28m to improve facilities at stations, targeting those areas of greatest benefit to passengers.

Southern has also pledged to focus on punctuality and to create over 1000 more car parking and 1500 secure cycle parking spaces.

In addition there will be a £3m investment in 120 new ticket machines by early 2012, enabling automatic top-ups for season tickets at 26 stations outside London.