The Government is planning to reopen railway lines that were closed in the 1960s as part of the Beeching cuts and to split up some of the major franchises.
Transport Secretary Chris Grayling said on Tuesday said that the plans could help ease overcrowding, encourage house building and boost the economy.
The move is part of the Government’s rail strategy to overhaul the network.
Under the proposals, the Thameslink, Southern and Great Northern (GTR) franchises could be split up in 2021.
A consultation has also been launched on the future of the Great Western franchise.
British Railways chairman Dr Beeching closed thousands of stations during the 1960s as part of a series of measures to stem losses from the network.
The Government is already planning on reopening the railway line from Oxford to Cambridge, with routes around Bristol, Birmingham and Exeter also being considered.
Mr Grayling said the rail network was “bursting at the seams” following massive growth in recent years.
“Rail passengers deserve a more reliable, more efficient service – and I will deliver it by ending the one-size-fits-all approach of franchising and bringing together the best of the public and private sector,” he said.
“We need to build on that success by building a new model for the 2020s and beyond, one more able to deal with the huge rise in passenger numbers and the challenges of an increasingly congested network,” he added.
Andy McDonald, Labour’s Shadow Transport Secretary, dismissed the plans as “unambitious”, describing the proposals as “more jam tomorrow from a Government which has run out of ideas”.
He said: “The Government’s failure stands in stark contrast to Labour’s plans to upgrade and expand the rail network across the country.
“The Tories’ record is of delayed, downgraded and cancelled investment, huge disparities in regional transport spending and soaring fares that are pricing passengers off our railways.”
Passenger groups were more positive about the proposals.
Anthony Smith, chief executive of the independent watchdog Transport Focus, welcomed the plans.
He said: “Railway services only improve with long-term, sustained investment. So pulling together a raft of initiatives in one strategy is a good step in communicating to passengers what the long-term plan is.
“Passengers want to know someone is in overall charge of their service, so the forming of closer alliances between track and train operators and potentially splitting large franchises could help that.
“The focus on improving the passenger experience, improved compensation and driving better value for money from the welcome passenger and taxpayer investment also sounds the right note. Expanding the network, through re-openings or new lines will help more people choose rail.”
However, Stephen Joseph from the Campaign for Better Transport, said it was “desperately difficult to reopen a rail line”.
Mick Cash general secretary of the Rail, Maritime and Transport (RMT) union, said: “Once the private train operators get their claws into the infrastructure they won’t let go until they’ve seized complete control and sweated our rail assets for every penny they can. That is the nature of the beast as Britain’s long-suffering rail users know only too well.
“RMT will fight these dangerous, profit driven plans with every tool at our disposal.”