Plans for a new HS2 high speed rail line have been dealt a huge blow after a Government inquiry suggested scrapping a major part of the project.

The National Infrastructure Commission (NIC), an official body which provides advice to the Government on infrastructure, suggested indefinitely delaying much of the eastern leg of the line, which is due to run from Birmingham to Leeds.

But it called on the Government to prioritise regional services instead, including pressing ahead with a high speed line from Birmingham to the East Midlands, with direct services to East Midlands Parkway and Nottingham.

Transport Secretary Grant Shapps will anounce next year whether he has accepted the reccomendations. A Department for Transport spokesperson said: "It is necessary that we take the time to consider these recommendations in full, and we therefore expect to publish the Integrated Rail Plan in early 2021."

The NIC urged the Government to go ahead with a planned scheme called the Midlands Rail Hub, which would mean faster trains and more services between between Birmingham and Coventry, Derby, Hereford and Worcester, as well as improved services to Wales and the south west.

It also backed plans for improved links to Birmingham International airport and Coventry from Derby and Sheffield in the North and Oxford and Reading in the South, through a scheme called the Midlands Engine Rail programme.

The proposed redevelopment of Moor Street Station would go ahead. It would be linked by footbridge to the new HS2 station at Curzon Street, creating something close to a single station, while pedestrian access to New Street station would also be improved.

Construction of the HS2 line between London and Birmingham has already begun, and this would continue under the new plans. The planned section linking Birmingham with Crewe and Manchester would also go ahead, and a modified version of the eastern leg of HS2 would continue - but only as far as the East Midlands. The Commission said that the full "phase 2b" of HS2, extending the line to Leeds, would not happen.

It said: "HS2 will mainly be concentrated on the western leg, with a mix of new lines and upgrades to connect the East Midlands and Yorkshire, rather than the full eastern leg of HS2 Phase 2b".

Under the proposals, there would be a marked improvement in many services from Birmingham. Journey times to London would be cut from 73 minutes to 48 minutes, and services increased from eight trains per hour to ten.

The journey time to Manchester would be cut from 90 minutes to 40 minutes, and journeys to Nottingham could take just 27 minutes, compared to 72 minutes at the moment.

Explaining why some projects had to be cut, the NIC said the Government had promised more than it can deliver. It warned: "Even in the highest budget option we have considered, there is not enough money for every rails cheme proposed."

Government proposals have included an HS2 rail line linking London, the Midlands, Yorkshire and the North West; a Northern Powerhouse Rail line, including a new high speed line across the Pennines; upgrades to the existing Transpennine Route; new rail lines in the East and West Midlands, and other interventions such as new signalling systems. This would all cost up to £185 billion in 2019-20 prices between 2020 and 2045, the NIC said - far more than was likely to be available.

Instead, the NIC set out proposals for the Government to spend either £108 billion or £129 billion.

It said the Government could choose to prioritise long distance services, which could mean building HS2 in full. However, it advised against this, saying: "The Commission’s analysis shows that prioritising regional links is likely to deliver the highest potential economic benefits to the Midlands and the North."

The Commission Chair is Sir John Armitt, chair of National Express, who was chairman of the Olympic Delivery Authority in the run-up to the 2012 Games.

He said: "The number and scale of rail schemes currently being proposed for the North and Midlands mean that some form of prioritisation will be necessary, and we think there are ways of bringing forward benefits for communities and businesses while keeping options open for additional investments if the circumstances are right."

The reccomendations prompted an angry reaction from Midlands transport leaders. Maria Machancoses, director of transport body Midlands Connect, said: "Some of the options in this report are very concerning. Sacrificing parts of the high speed network now would short-change millions of people across the Midlands and undermine our efforts to deliver a transport network fit for the 21st Century.

"HS2 must be delivered in its entirety, including its Eastern Leg from Birmingham to Leeds, alongside Midlands Engine Rail. To stall, scale down or delay now will cause irreparable economic damage to communities across the region – especially the East Midlands, which has suffered from a chronic underinvestment in infrastructure for decades."

The Commission said there was an urgent need to improve rail services in the North and Midlands, warning that investment in rail had not kept up with demand for services.

It said: "Between 2010 and 2019, passenger arrivals by rail during themorning peak increased 36 per cent in Manchester, 41 per cent in Birmingham and 19 per cent in Leeds.

"However, capacity has not been able to keep up. Trains are often crowded, with peak morning trains operating over capacity in Manchester, Birmingham and Leeds in particular.

"Despite the growth in the number of people commuting into city centres, rail journeys between majorcities in the Midlands and the North can be slow, and the service unreliable. Trains between Reading and London run at almost double the speed of trains between Manchester and Leeds, which have an average speed of 48 miles per hour. These problems need to be addressed to enable growth in cities in theMidlands and the North and the surrounding towns."