The firm, which had intended to run its state-of-the-art Pendolino trains at 140 miles per hour, said it was pressing the government for hundreds of millions of pounds in compensation for the speed restriction.

"We planned to run eleven trains an hour (from London's Euston station) at 140 miles per hour. If we don't get that, then large amounts of money won't come in," Chief Executive Chris Green told reporters at the unveiling of Virgin's first Pendolino train.

The setback is only the latest disappointment for Britain's long-suffering train passengers. The government-directed Strategic Rail Authority announced last week that a new safety system to automatically stop trains passing red lights would not be ready until 2015, five years behind schedule.

Confidence in Britain's railways is at rock bottom after a series of fatal crashes and the government's decision to force track operator Railtrack Plc into administration last October.

Virgin Trains, chaired by serial entrepreneur Richard Branson, runs the west coast main line route between London and Scotland, which is Europe's busiest and is currently undergoing a multi-billion pound, and much delayed, modernisation.

The firm had hoped to launch its new fleet of Pendolino trains, which include in-seat audio entertainment systems and self-service shops, in May this year, but put this back to May 2003 and said on Tuesday it was now aiming for October 2003.

The Italian-designed Pendolino's tilt allows it to maintain high-speeds while going round bends and Virgin believes it will be able to cut journey times by around 20 percent.

The journey from London to Manchester, for example, is forecast to take two hours and five minutes on a Pendolino, compared with two hours and 40 minutes at present.

Virgin said it had an agreement to run nine Pendolinos an hour from Euston at 125 miles per hour, but was negotiating with Railtrack and the government to increase the frequency of departures and get compensation for the speed restriction.

Chairman Richard Branson told reporters he was confident of agreeing a compensation package within the next few months.

Stagecoach Group Plc, which owns 49 percent of Virgin Trains, said on Monday it had received 90 million pounds ($131 million) in compensation from Railtrack for delays in upgrading the west coast main line.

Branson, whose sprawling empire of 270 Virgin companies ranges from mobile phone operations to an airline, played down the importance of the speed restriction on Pendolinos.

"The difference between 125 and 140 miles per hour is only about six-to-seven minutes in journey time," he told reporters. "We're giving passengers around 95 percent of what they want."

He also would not rule out running Pendolinos at top-speed some time in the future -- "when the country can afford it."

Virgin, which is buying 53 Pendolino trains at a cost of around 600 million pounds, said it planned to run a non-tilting service between Manchester and Birmingham for the Commonwealth Games, which are being held in Manchester from July 25.

The Pendolino trains would then replace the existing fleet, running at 110 miles per hour, from September 2002 and would start tilting at that speed from May 2003.

Britain's last flirtations with a tilting train project -- the Advanced Passenger Train -- was abandoned in the 1980s.