French train company Connex, which has been contracted to run Dublin's LUAS, has had its contract to run railways in the southeast of England terminated three years early.
Britain's Strategic Rail Authority (SRA) said Connex had failed to meet a detailed action programme of improvements on its busy London and southeast England routes.
SRA chairman Mr Richard Bowker said the decision had been taken "to protect taxpayers' money and passenger delivery".
But Connex chief executive Mr Olivier Brousse said: "I am shocked by the SRA's decision, most particularly for our staff who worked tirelessly to run this railway as best as they could".
Connex's franchise had been due to run until 2006, but the company was heavily dependent on subsidies from the SRA.
In December last year the SRA gave the company £58 million sterling to stabilise its position, at the same time demanding that it draw up plans to improve its financial performance radically. But the operator recently requested another £200 million in subsidy.
After today's announcement there will be a six-month "managed exit" period, after which Connex will hand over to a temporary shadow company, headed by two SRA directors and representatives from other operators. That body will be responsible for services until the franchise is again put out to tender among private operators.
Connex is the largest private transport operator in Europe, with an annual turnover of over €3 billion and over 40,000 employees. The company has built its reputation by moving into public sector businesses and running them privately.