Value for money has not been achieved by the UK's largest rail franchise, the Government spending watchdog said.
Passengers on the Thameslink, Southern and Great Northern (TSGN) franchise have suffered the worst disruption on the network since services began in September 2014, the National Audit Office (NAO) reported.
Industrial action has been a "major contributor" to delays and cancellations but the Department for Transport (DfT) made decisions which "have negatively impacted on passengers", it found.
The inquiry noted that the "complex and ambitious" franchise has the highest passenger numbers in the country and includes four major train services operating on a very congested part of the railway with unreliable infrastructure.
DfT officials failed to grasp the potential impact on passengers of combining an increase in capacity, targets to improve services and expansion of driver only operated trains, which has led to strikes by trade union members.
Since Govia began operating the full franchise in July 2015, around 146,000 trains (7.7% of services) have either been cancelled or delayed by over half an hour, compared with 2.8% on the rest of the network.
A large chunk of the disruption has been caused by a shortage of train crews.
The DfT and Govia say industrial action was the biggest cause of this, although the operator has also been hit by a shortage of employed drivers.
Between the start of the franchise and August 2017 the DfT made franchise payments of £2.8 billion to Govia and received £3.6 billion from train tickets.
NAO head Amyas Morse said: "Over the last three years long-suffering passengers on the Thameslink franchise have experienced the worst performance on the rail network.
"Some of the problems could have been avoided if the Department had taken more care to consider passengers in its design of the franchise."
Govia chief executive Charles Horton said the difficulties faced by the franchise have "sometimes been greater than expected and we regret the disruption caused to our passengers".
He went on: "I am more confident than ever that its trailblazing achievements will be felt by rail travellers for generations to come."
Shadow transport secretary Andy McDonald said: "The National Audit Office's claim that passenger misery could have been avoided if the DfT had taken more care to consider passengers is true for the entire railway."
The RMT, which has been embroiled in a dispute with Southern over the role of guards for 20 months, described the report as "dynamite" and claimed it proves the Government has given Govia "a free hand to slash staff and run services into the ground".
A DfT spokesman said: "The NAO report confirms that the primary cause of delays and cancellations to passengers has been lack of available staff, which is a direct result of strike action.
"It is time for the RMT to call off its needless strike action."
He added that the level of disruption during the franchise has been "unacceptable" but the department expects the improvement in reliability over the past 12 months to continue as the Thameslink programme is completed this year.