The competition to operate rail services between London, Kent and parts of East Sussex has been cancelled, the government has said.
The current incumbent, Southeastern, has been given a five-month extension to run the route until April 2020.
Southeastern is operated by Go-Ahead, which won the franchise in 2006.
Go-Ahead chief executive David Brown said he was disappointed the original bid was not being taken forward by the Department for Transport.
A Department for Transport spokesperson said: “We have taken the decision to cancel the South Eastern franchise competition.
“This follows significant concerns that continuing the competition process would lead to additional costs incurred to the taxpayer, with no certainty that this would deliver envisaged benefits for passengers in a timely fashion.”
He said the department would “use this period to develop a solution that delivers the capacity and performance benefits that passengers are expecting”.
It will also allow the government to ensure that the recommendations of the review being conducted by the former boss of British Airways, Keith Williams, in to the railways, are taken into account.
His Williams Review will be published in the autumn but he has previously told the BBC government involvement should be limited to overall policy and budget decisions, and the Department for Transport should not manage the system.
David Statham, Southeastern’s managing director, said: “Over this next extension period, our focus remains squarely on our passengers, delivering more improvements and continuing to improve the punctuality and reliability of our services.”
In 2012, bidding on two other rail franchises – the West Coast Partnership and Great Western – were also cancelled.