The Government has announced that the ability of train operators to add an additional 5% to some individual fares, as long as the average rise of regulated fares is maintained at 1% above RPI inflation, is being limited to just 2%.
This means that in January 2014, no regulated fare - which includes season tickets - can go up by more than 6.2%, with the average, as already announced, being limited to 4.2%.
With the new year rise being based on the July 2013 RPI inflation rate, which was 3.2%, some season tickets could have gone up by as much as 9.2% under the old "flexible" system.
The reduction in "flex" is part of the Government's fares and ticketing review published today by Transport Secretary Patrick McLoughlin.
As well as curbing the rise in fares, the review opens the door for future innovations such as the end of paper tickets, a code of conduct for train companies to give passengers the confidence that they are getting the best deal for their journey, and a flexible approach to season tickets which could benefit part-time workers.
Mr McLoughlin said: "Today is just the start of a Government-wide programme to help hardworking people and reduce the cost of living. The Government will be announcing a range of initiatives to help put money back in people's pockets over the next few weeks.
"By capping fares we are protecting passengers from large rises at a time when family incomes are already being squeezed. We will need to wait for the rail industry to calculate individual ticket prices for next year, but this cap could save some commuters as much as £200 a year.
"Alongside this, the Government is investing over £16 billion to transform our rail network, which will make sure we can respond to increasing passenger demand and drive forward economic growth that will help strengthen our economy."
In addition to the limit on the maximum increase in regulated fares, the review includes measures on::
:: A Ticketing Code of Practice: the Office of Rail Regulation (ORR) will oversee the code to ensure that passengers are provided with the information they need to choose the best ticket for their journey and that this information is clear and not misleading;
:: Ticket Offices: a strengthening of the rules around how train companies alter opening times at station ticket offices. The Government's intention is that passenger representative bodies can play a greater role in shaping any changes and ensure that appropriate passenger safeguards are also put in place;
:: Flexible Ticketing: the Government is committed to introducing more "touch in - touch out" rail tickets across the network which could mean part-time workers receive a discount on season tickets for travelling three days rather than five or for travelling earlier or later. The Department for Transport's (DfT) £45 million South East Flexible Ticketing programme will pilot many of these innovations next year;
:: Market Study: the ORR will look into the sale of tickets and consider whether current markets are operating efficiently, effectively, and in the best interests of passengers and taxpayers. The department has committed to consider any cost-effective recommendations that come out of the study;
:: Annual Surveys: The Association of Train Operating Companies has agreed to release the information to customers from next year on how well ticket office staff, ticket machines and websites perform in regards to selling passengers the best ticket for their journey;
:: Single Leg Pricing: the DfT is planning a pilot scheme which will allow passengers to more easily "'mix and match" each ticket type when planning a return journey, giving passengers extra confidence that they are getting the best deal on their journeys.
Anthony Smith, chief executive of rail customer watchdog Passenger Focus, said: "Passengers will be pleased to hear that the amount train companies can raise individual regulated fares by has been limited.
"We have been calling for this to happen for years - it is a step towards a fairer system. This will allow passengers to plan with a bit more certainty and have confidence that actual regulated fare rises will bear more relation to the figures set by government."
He went on: "It is imperative the rail industry does what it can to ensure that passengers buy the right ticket. It should then be obvious what they have bought and when it can be used. These reforms taken together will, in time, help boost confidence. The price of getting it wrong has now become very high for passengers."
TUC general secretary Frances O'Grady said: "Like all these things, the devil is in the detail, but we are pleased the Government has responded to concerns raised by unions and passenger groups over ticket office opening hours and runaway fares.
"However, ministers are still failing to deal with the elephant in the room - the market failure of rail privatisation. this is wasting millions in taxpayers' money every year and is one of the main reasons why fares have become so eye-wateringly expensive."
Mary Creagh, shadow transport secretary said: "Under David Cameron we have a cost of living crisis. Prices have gone up faster than wages in 38 of 39 months while he has been Prime Minister and working people are almost £1,500 a year worse off.
"Over the last three years David Cameron has failed to stand up for working people, allowing train companies to hit passengers with inflation-busting fare rises of up to nine per cent. Far from addressing his failure, this is cold comfort for commuters - it has taken 18 months, delivers fare increases of up to six per cent and is too little too late. This announcement doesn't go as far as Labour's plans which would prevent train companies from increasing fares beyond one per cent above inflation.
"If David Cameron was serious about tackling his cost of living crisis he would back Labour's plans to freeze energy prices and expand free childcare for working parents. While Labour is calling for a tax cut for millions of working people with a lower 10p starting rate of tax, David Cameron has shown how he only stands up for a privileged few, giving a huge tax cut to people on over £150,000 a year. David Cameron and the Tories are completely out of touch."