A transport company could sue the government if it does not renegotiate its rail franchise.

The Sunday Times reported that FirstGroup, which operates South Western Railway, might take legal action against the government if its terms are not met.

South Western Railway's network includes the Weymouth-Waterloo line.

It was reported that Matthew Gregory, chief executive of FirstGroup, said he would rather reach a deal with the Department for Transport, but that other options would be considered if this failed.

He said: "This is a difficult one for us. Some of the protection mechanisms haven't worked as we had expected them to, or believe they should have worked.

"We prefer to work with our customer to find resolution through discussion and negotiation. If there's a contractual issue that we are unable to deal with through negotiation, we would have to turn to other means."

FirstGroup acquired the SWR contract along with MTR with a pledge of £2.6bn to the government in premiums.

If it goes ahead, this would not be the first legal action against the government from transport companies.

Stagecoach and Arriva are suing over the East Midlands contract, and the owners of Abellio are also threatening action over the Greater Anglia route.