Train passengers hit by weeks of cancellations and delays because of a London Midland (LM) driver shortage are set to be offered free travel.More than 950 services were affected between 14 October and 10 December.
The government has told LM to offer a £7m package of benefits, which includes season ticket holders getting five days of free travel passes.
Transport Minister Norman Baker said the firm had fallen short of its franchise obligations.
The government has also secured 500,000 additional cheap advance tickets for passengers on key routes serving London, Birmingham, Northampton, Crewe and Liverpool and a commitment to invest in infrastructure improvements.
Mr Baker said: "London Midland has cancelled or delayed hundreds of services in recent months."On repeated occasions, they were not able to provide enough drivers and some services had to be cancelled, with severe delays to services, and they have fallen short both of everyone's expectations and their franchise obligations.
"Securing these benefits for passengers represents a firm yellow card for London Midland and some financial benefit for those who have been hardest hit by their poor performance."
Mr Baker said he was confident the firm had now rectified the driver shortage but added the government would continue to monitor its performance and "take firmer action if necessary".
The firm, which will continue to operate the routes until at least September 2015, has apologised for its problems and said it had seen a higher than normal turnover of drivers.
Train drivers' basic annual gross salary in West Midlands
- Arriva Cross Country..£53,171
- Virgin Trains...................£49,620
- Chiltern Railways..........£45,305
- London Midland..........£42,619